DDR
DEVELOPERS DIVERSIFIED REALTY CORP (Form: 8-K, Received: 02/14/2006 06:19:51)
 

 
 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported)   February 13, 2006  
DEVELOPERS DIVERSIFIED REALTY CORPORATION
(Exact name of registrant as specified in its charter)
         
Ohio   1-11690   34-1723097
 
(State or other jurisdiction
of incorporation)
  (Commission
File Number)
  (IRS Employer
Identification No.)
     
3300 Enterprise Parkway, Beachwood, Ohio   44122
     
(Address of principal executive offices)   (Zip Code)
Registrant’s telephone number, including area code (216) 755-5500
 
(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
o   Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
o   Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
o   Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
o   Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
 
 

 


 

Item 2.02 Results of Operations and Financial Condition
On February 13, 2006, the Company issued a News Release containing financial results of the Company (the “News Release”) and a quarterly financial supplement containing financial and property information of the Company (“Quarterly Supplement”) for the year ended December 31, 2005. A Copy of the News Release is attached hereto as exhibit 99.1 and a copy of the Quarterly Supplement is attached hereto as Exhibit 99.2. This information is being furnished under Item 7 (Regulation FD Disclosure) and under Item 2.02 (Results of Operations and Financial Condition), pursuant to SEC Release No. 33-8216.

 


 

SIGNATURES
     Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
         
 
      Developers Diversified Realty Corporation
 
       
 
      (Registrant)
 
       
Date
  February 13, 2006   /S/ William H. Schafer
 
       
 
      William H. Schafer
 
      Executive Vice President and Chief Financial Officer

 

 

EXHIBIT 99.1
DEVELOPERS DIVERSIFIED REALTY CORPORATION
For Immediate Release :
         
Contact:
  Scott A. Wolstein   Michelle M. Dawson
 
  Chairman   Vice President of Investor Relations
 
  Chief Executive Officer   216-755-5455
 
  216-755-5500    
DEVELOPERS DIVERSIFIED REALTY REPORTS AN 8.8% INCREASE IN FFO
PER SHARE FOR THE YEAR ENDED DECEMBER 31, 2005

      CLEVELAND, OHIO, February 13, 2006 — Developers Diversified Realty Corporation (NYSE: DDR), a real estate investment trust (“REIT”), today announced that fourth quarter 2005 Funds From Operations (“FFO”), a widely accepted measure of REIT performance, on a per share basis was $0.74 (diluted and basic) as compared to $0.69 (diluted) and $0.70 (basic) per share for the same period in the previous year, an increase of 7.2% diluted and 5.7% basic. FFO available to common shareholders was $81.7 million for the quarter ended December 31, 2005, as compared to $73.0 million for the fourth quarter of 2004, an increase of 11.9%. Net income available to common shareholders for the three month period ended December 31, 2005 decreased 52.6% to $35.1 million or $0.32 per share (diluted and basic) compared to fourth quarter 2004 net income of $74.1 million, or $0.71 per share (diluted) and $0.72 per share (basic). The decrease in net income for the quarter ended December 31, 2005 is primarily related to a decrease in gain on sales of real estate assets and discontinued operations, of $43 million of which $37 million is excluded from the computation of FFO.
     On a per share basis, FFO (diluted) was $3.21 and $2.95 for the years ended December 31, 2005 and 2004, respectively, an increase of 8.8%. FFO available to common shareholders for the year ended December 31, 2005 was $355.1 million compared to FFO available to common shareholders for the year ended December 31, 2004 of $292.3 million. Net income available to common shareholders for the twelve month period ended December 31, 2005 was $227.5 million, or $2.08 per share (diluted) and $2.10 (basic) in 2005, compared to net income available to common shareholders of $219.1 million, or $2.24 per share (diluted) and $2.27 (basic) for 2004.
     Scott Wolstein, DDR’s Chairman and Chief Executive Officer stated, “I’m pleased to report this quarter’s earnings, which reflect outstanding tenant demand for space in our community center portfolio and strong portfolio fundamentals, as well as a strong balance sheet position, with significant cashflow liquidity and financial flexibility. Our year-end results reflect the growing strength of our asset class and successful execution of a focused and disciplined capital recycling strategy. We sold nearly $600 million in assets, which helped generate the capital needed to fund our development pipeline and expand our footprint into Puerto Rico and the Western U.S. through key portfolio acquisitions from Caribbean Property Group and Mervyns.”
     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 fourth quarter of 2005, the Company executed 101 new leases aggregating approximately 740,000 square feet and 182 renewals aggregating approximately 674,000 square feet. Rental rates on new leases increased by 29.2% to $14.35 per square foot and rental rates on renewals increased by 9.4% to $12.87 per square foot as compared to previously occupied rental rates. On a blended basis, rental rates for new leases and renewals increased by 14.2% to $13.56 per square foot. At December 31, 2005, the average annualized base rent per occupied square foot, including those properties owned through joint ventures, was $11.30.
     At December 31, 2005, the portfolio, including those properties owned through joint ventures, was 96.4% leased. Excluding the impact of the properties acquired from Benderson Development, Caribbean Property Group and Mervyns, the portfolio was also 96.4% leased, as compared to 95.4% at December 31, 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 December 31, 2005, the portfolio was 95.3% occupied. Excluding the impact of the properties acquired from Benderson Development, Caribbean Property Group and Mervyns, the portfolio was 95.1% occupied, as compared to 94.6% at December 31, 2004.
     Same store Net Operating Income (“NOI”) relating to Core Portfolio Properties (i.e., shopping center properties owned since January 1, 2004, including those owned through joint ventures and excluding properties under redevelopment) increased approximately $8.5 million (or 2.2%) for the year ended December 31, 2005.
Strategic Real Estate Transactions:
Mervyns Stores
     In mid September 2005, the Company formed a joint venture (the “Mervyns Joint Venture”) with Macquarie DDR Trust (“MDT”), which acquired the underlying real estate of 36 operating Mervyns stores. The Mervyns Joint Venture is owned 50% by the Company and 50% by MDT. However, the assets, liabilities and operating results are consolidated within the DDR accounts in accordance with FIN 46. The Mervyns Joint Venture acquired one additional asset in the fourth quarter of 2005 for approximately $20.7 million and the final asset was acquired by the joint venture for approximately $11.0 million in January 2006.

 


 

Expansions:
     During the year ended December 31, 2005, the Company completed nine expansions and redevelopment projects located in Hoover, Alabama; Tallahassee, Florida; Suwanee, Georgia; Princeton, New Jersey; Hendersonville, North Carolina; Allentown, Pennsylvania; Erie, Pennsylvania; Bayamon, Puerto Rico and Johnson City, Tennessee at an aggregate cost of $41.6 million. The Company is currently expanding/redeveloping eight shopping centers located in Gadsden, Alabama; Ocala, Florida; Stockbridge, Georgia; Ottumwa, Iowa; Gaylord, Michigan; Rome, New York; Mooresville, North Carolina and Bayamon, Puerto Rico at a projected incremental cost of approximately $38.5 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 year ended December 31, 2005, two of the Company’s joint ventures completed expansion/redevelopment projects at their shopping centers located in St. Petersburg, Florida and Merriam, Kansas at an aggregate cost of $9.3 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 $57.4 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 year ended December 31, 2005, the Company substantially completed the construction of four shopping center projects located in Overland Park, Kansas; Lansing, Michigan; Freehold, New Jersey and Mt. Laurel, New Jersey. Many of these tenants are open and operating.
     The Company currently has eight shopping center projects under construction. These projects are located in Miami, Florida; Nampa, Idaho; McHenry, Illinois; Chesterfield, Michigan; Horseheads, New York; Apex, North Carolina (Beaver Creek Crossings — Phase I); Pittsburgh, Pennsylvania and San Antonio, Texas. These projects are scheduled for completion during 2006 through 2007 at a projected aggregate cost of approximately $428.6 million and will create an additional 4.1 million square feet of retail space. At December 31, 2005, approximately $178.3 million of costs were incurred in relation to these development projects.
     The Company anticipates commencing construction in early 2006 on four additional shopping centers located in Homestead, Florida; Norwood, Massachusetts; Seabrook, New Hampshire 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 $119.3 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. The project located in San Antonio, Texas was substantially completed during 2005 and a portion of the project located in Jefferson County (St. Louis), Missouri has been substantially completed. The remaining projects are scheduled for completion during 2007. At December 31, 2005, approximately $60.7 million of costs were incurred in relation to these development projects.

 


 

Dispositions:
     In the fourth quarter of 2005, the Company sold three shopping center properties aggregating 0.1 million square feet for approximately $18.8 million and recognized a non-FFO gain of approximately $2.7 million.
     In December 2005, one of the Company’s joint ventures with Coventry Real Estate Partners sold a 0.3 million square foot shopping center in San Ysidro, California for approximately $42.5 million. The joint venture recognized an aggregate gain of approximately $9.1 million. In conjunction with this transaction, the Company recognized a contribution to FFO of $1.9 million, as the Company considers this sale part of its merchant build program due to the recent redevelopment of this former factory outlet center, which is reflected through its equity in earnings of joint ventures.
Financings:
     In October 2005, the Company issued $350 million of seven-year senior unsecured notes. The 5.375% notes are due on October 15, 2012 and were offered at 99.52% of par. The notes are redeemable prior to maturity at par value plus a make-whole premium. If the notes are redeemed within 90 days of the maturity date, no make-whole premium will be paid. The effective interest rate, after taking into account the treasury rate locks that were previously entered into by the Company, will adjust the seven-year rate to an effective rate of 5.1%. Proceeds from the offering were used for general corporate purposes, including repayment of floating rate debt on the Company’s revolving credit facilities.
     Developers Diversified Realty Corporation currently owns and manages approximately 500 retail operating and development properties in 44 states, plus Puerto Rico, comprising approximately 113 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     Year Ended  
    Ended December 31,     December 31,  
Revenues:   2005     2004     2005     2004  
Minimum rents (A)
  $ 137,805     $ 113,131     $ 512,206     $ 407,700  
Percentage and overage rents (A)
    5,417       2,916       10,299       7,572  
Recoveries from tenants
    43,227       33,749       158,076       116,975  
Ancillary income
    2,960       1,007       9,548       3,162  
Other property related income
    894       879       4,888       4,147  
Management fee income
    5,681       4,162       19,657       14,626  
Development fees
    1,289       587       3,202       2,311  
Other (B)
    1,174       931       9,300       13,081  
 
                       
 
    198,447       157,362       727,176       569,574  
 
                       
Expenses:
                               
Operating and maintenance
    28,402       20,812       98,549       64,742  
Real estate taxes
    23,284       20,441       85,592       73,601  
General and administrative (C)
    13,860       14,145       54,048       47,126  
Depreciation and amortization
    47,829       35,748       164,868       124,175  
 
                       
 
    113,375       91,146       403,057       309,644  
 
                       
Other income (expense):
                               
Interest income
    3,686       1,065       10,078       4,233  
Interest expense
    (50,845 )     (36,172 )     (182,279 )     (124,543 )
Other expense (D)
    (7 )     (320 )     (2,532 )     (1,779 )
 
                       
 
    (47,166 )     (35,427 )     (174,733 )     (122,089 )
 
                       
Income before equity in net income of joint ventures, minority equity interests, income tax of taxable REIT subsidiaries and franchise taxes, discontinued operations, gain on sales of real estate and cumulative effect of adoption of a new accounting standard
    37,906       30,789       149,386       137,841  
Equity in net income of joint ventures (E)
    8,890       10,409       34,873       40,895  
Minority equity interests (F)
    (2,677 )     (1,727 )     (7,881 )     (5,064 )
Income tax benefit (expense) of taxable REIT subsidiaries and franchise taxes
    213       789       (342 )     (1,469 )
 
                       
Income from continuing operations
    44,332       40,260       176,036       172,203  
Income from discontinued operations (G)
    2,455       9,438       18,467       15,918  
 
                       
Income before gain on sales of real estate and cumulative effect of adoption of a new accounting standard
    46,787       49,698       194,503       188,121  
Gain on sales of real estate, net of tax
    2,075       38,150       88,140       84,642  
 
                       
Income before cumulative effect of adoption of a new accounting standard
    48,862       87,848       282,643       272,763  
Cumulative effect of adoption of a new accounting standard (H)
                      (3,001 )
 
                       
Net income
  $ 48,862     $ 87,848     $ 282,643     $ 269,762  
 
                       
Net income, applicable to common shareholders
  $ 35,070     $ 74,055     $ 227,474     $ 219,056  
 
                       
Funds From Operations (“FFO”):
                               
Net income applicable to common shareholders
  $ 35,070     $ 74,055     $ 227,474     $ 219,056  
Depreciation and amortization of real estate investments
    46,610       37,647       169,117       130,536  
Equity in net income of joint ventures (E)
    (8,890 )     (10,409 )     (34,873 )     (40,895 )
Joint ventures’ FFO (E)
    11,864       11,824       49,302       46,209  
Minority equity interests (OP Units) (F)
    729       691       2,916       2,607  
Gain on sales of depreciable real estate, net
    (3,671 )     (40,778 )     (58,834 )     (68,179 )
Cumulative effect of adoption of a new accounting standard (H)
                      3,001  
 
                       
FFO available to common shareholders
    81,712       73,030       355,102       292,335  
Preferred dividends
    13,792       13,793       55,169       50,706  
 
                       
FFO
  $ 95,504     $ 86,823     $ 410,271     $ 343,041  
 
                       
Per share data:
                               
Earnings per common share
                               
Basic
  $ 0.32     $ 0.72     $ 2.10     $ 2.27  
 
                       
Diluted
  $ 0.32     $ 0.71     $ 2.08     $ 2.24  
 
                       
Dividends Declared
  $ 0.54     $ 0.51     $ 2.16     $ 1.94  
 
                       
Funds From Operations — Basic (I)
  $ 0.74     $ 0.70     $ 3.23     $ 2.98  
 
                       
Funds From Operations — Diluted (I)
  $ 0.74     $ 0.69     $ 3.21     $ 2.95  
 
                       
Basic — average shares outstanding (thousands) (I)
    108,523       102,979       108,310       96,638  
 
                       
Diluted — average shares outstanding (thousands) (I)
    109,168       105,264       109,142       99,024  
 
                       

 


 

DEVELOPERS DIVERSIFIED REALTY CORPORATION
Financial Highlights
(In thousands — except per share data)
 
(A)   Increases in base and percentage rental revenues for the twelve month period ended December 31, 2005 as compared to 2004, aggregated $100.2 million consisting of $4.9 million related to leasing of core portfolio properties (an increase of 1.9% from 2004), $132.7 million from the acquisition of assets and $9.8 million related to developments and redevelopments. These amounts were offset by a decrease of $2.6 million related to the Company’s remaining seven business center properties and $44.6 million due to the sale of properties in 2004 and 2005 to joint ventures. Included in the rental revenues for the twelve month periods ended December 31, 2005 and 2004 is approximately $14.4 million and $7.4 million, respectively, of revenue resulting from the recognition of straight line rents.
 
(B)   Other income for the three and twelve month periods ended December 31, 2005 and 2004 was comprised of the following (in millions):
                                 
    Three Month Period     Twelve Month Period  
    Ended December 31,     Ended December 31  
    2005     2004     2005     2004  
Lease termination fees and bankruptcy settlements
  $ 0.8     $ 0.7     $ 5.9     $ 9.8  
Financing fees
    0.1             2.4       3.0  
Other miscellaneous
    0.3       0.2       1.0       0.3  
 
                       
 
  $ 1.2     $ 0.9     $ 9.3     $ 13.1  
 
                       
(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 twelve month periods ended December 31, 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 and certain litigation costs. In 2005, the Company incurred certain litigation costs of $1.6 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     Twelve Month Period  
    Ended December 31,     Ended December 31,  
    2005     2004     2005     2004  
Revenues from operations (a)
  $ 112,467     $ 93,553     $ 428,587     $ 324,497  
 
                       
 
                               
Operating expense
    42,234       32,419       152,664       111,313  
Depreciation and amortization of real estate investments
    21,815       26,303       84,737       64,079  
Interest expense
    31,091       22,720       117,058       76,994  
 
                       
 
    95,140       81,442       354,459       252,386  
 
                       
Income from operations before gain on sales of real estate and discontinued operations
    17,327       12,111       74,128       72,111  
Gain (loss) on sales of real estate
    60       (38 )     858       4,787  
(Loss) income from discontinued operations, net of tax
    (905 )     1,379       (1,382 )     2,269  
Gain on sales of discontinued operations, net of tax
    13,527       14,727       48,982       39,612  
 
                       
Net income
  $ 30,009     $ 28,179     $ 122,586     $ 118,779  
 
                       
DDR Ownership interests (b)
  $ 8,775     $ 10,667     $ 36,828     $ 42,150  
 
                       
 
                               
Funds From Operations from joint ventures are summarized as follows:
                               
Net income
  $ 30,009     $ 28,179     $ 122,586     $ 118,779  
Gain on sales of real estate, including discontinued operations
    (6,287 )     (13,577 )     (19,014 )     (37,866 )
Depreciation and amortization of real estate investments
    22,029       27,891       87,508       68,456  
 
                       
 
  $ 45,751     $ 42,493     $ 191,080     $ 149,369  
 
                       
DDRC Ownership interests (b)
  $ 11,864     $ 11,824     $ 49,302     $ 46,209  
 
                       
DDRC Partnership distributions received, net (c)
  $ 12,927     $ 15,585     $ 126,647     $ 77,505  
 
                       

 


 

DEVELOPERS DIVERSIFIED REALTY CORPORATION
Financial Highlights
(In thousands — except per share data)
  (a)   Revenues for the three month periods ended December 31, 2005 and 2004 included approximately $1.1 million and $2.0 million, respectively, resulting from the recognition of straight line rents of which the Company’s proportionate share is $0.1 million and $0.4 million, respectively. Revenues for the twelve month periods ended December 31, 2005 and 2004 included approximately $6.6 million and $6.5 million, respectively, resulting from the recognition of straight line rents of which the Company’s proportionate share is $1.1 and $1.4 million, respectively.
 
  (b)   Included in the Company’s equity in net income and FFO from joint ventures for the twelve months ended December 31, 2004, is approximately $3.2 million of gain related to the sale of a 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 $0.3 million for the three month period ended December 31, 2004, and by $2.1 million and $1.3 million for the twelve month periods ended December 31, 2005 and 2004, respectively, to reflect additional basis depreciation and adjustments to gain on sales.
 
      At December 31, 2005 and 2004, the Company owned joint venture interests, excluding consolidated joint ventures, relating to 110 and 103 shopping center properties, respectively. In addition, at December 31, 2005 and 2004, respectively, the Company, through a joint venture, owned an interest of approximately 25% in 53 and 63 shopping center sites formerly owned by Service Merchandise, respectively.
 
  (c)   Distributions include funds received from asset sales and refinancings in addition to ongoing operating distributions.
(F)   Minority equity interests are comprised of the following (in thousands):
                                 
    Three Month Period     Twelve Month Period  
    Ended December 31,     Ended December 31,  
    2005     2004     2005     2004  
Minority interests
  $ 1,948     $ 1,036     $ 4,965     $ 2,457  
Operating partnership units
    729       691       2,916       2,607  
 
                       
 
  $ 2,677     $ 1,727     $ 7,881     $ 5,064  
 
                       
(G)   The operating results relating to assets classified as discontinued operations are summarized as follows (in thousands):
                                 
    Three Month Period     Twelve Month Period  
    Ended December 31,     Ended December 31,  
    2005     2004     2005     2004  
Revenues
  $ 249     $ 8,185     $ 21,395     $ 35,672  
 
                       
 
                               
Expenses:
                               
Operating
    392       3,165       9,139       13,402  
Impairment charge
                642       586  
Interest, net
    39       1,384       3,914       5,902  
Depreciation
    51       2,147       5,833       8,472  
Minority interests
    3       (7 )     67       (47 )
 
                       
Total expenses
    485       6,689       19,595       28,315  
 
                       
(Loss) income before gain on sales of real estate
    (236 )     1,496       1,800       7,357  
Gain on sales of real estate (1)
    2,691       7,942       16,667       8,561  
 
                       
Net income
  $ 2,455     $ 9,438     $ 18,467     $ 15,918  
 
                       

 


 

DEVELOPERS DIVERSIFIED REALTY CORPORATION
Financial Highlights
(In thousands — except per share data)
  (1)   During 2005, the Company’s gain on sales of real estate was reduced by $1.9 million relating to debt prepayment costs incurred as a result of the sales transaction. This debt prepayment has been accounted for as a cost of sale and neither the gross gain on sale nor the related costs of the sale have been included in FFO.
(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 Operating Partnership Units (OP Units) outstanding at December 31, 2005 and 2004 into 1.3 million and 1.4 million common shares of the Company for the three month periods ended December 31, 2005 and 2004, respectively, and 1.3 million for each of the twelve month periods ended December 31, 2005 and 2004, on a weighted average basis. The weighted average diluted shares and OP Units outstanding were 110.8 million and 105.4 million for the three month periods ended December 31, 2005 and 2004, respectively, and 110.7 million and 99.1 million for the twelve month periods ended December 31, 2005 and 2004, respectively.

 


 

DEVELOPERS DIVERSIFIED REALTY CORPORATION
Financial Highlights
(In thousands)
Selected Balance Sheet Data:
                 
    December 31, 2005 (1)     December 31, 2004  
Assets:
               
Real estate and rental property:
               
Land
  $ 1,721,321     $ 1,238,242  
Buildings
    4,806,373       3,998,972  
Fixtures and tenant improvements
    152,958       120,350  
Construction in progress
    348,685       245,860  
 
           
 
    7,029,337       5,603,424  
Less accumulated depreciation
    (692,823 )     (568,231 )
 
           
Real estate, net
    6,336,514       5,035,193  
 
               
Cash
    30,655       49,871  
Advances to and investments in joint ventures
    275,136 (2)     288,020  
Notes receivable
    24,996       17,823  
Receivables, including straight line rent, net
    112,464       84,843  
Other assets, net
    83,212       107,797  
 
           
 
  $ 6,862,977     $ 5,583,547  
 
           
 
               
Liabilities:
               
Indebtedness:
               
Revolving credit facilities
  $ 150,000     $ 60,000  
Variable rate unsecured term debt
    200,000       350,000  
Unsecured debt
    1,966,268       1,220,143  
Mortgage and other secured debt
    1,574,733       1,088,547  
 
           
 
    3,891,001       2,718,690  
Dividends payable
    65,799       62,089  
Other liabilities
    204,447       192,514  
 
           
 
    4,161,247       2,973,293  
Minority interests
    131,449       55,935  
Shareholders’ equity
    2,570,281       2,554,319  
 
           
 
  $ 6,862,977     $ 5,583,547  
 
           
 
(1)   Amounts include the consolidation of the Mervyns, 50% owned joint venture, formed in September 2005, which includes $394.7 million of real estate assets, $258.5 million of mortgage debt and $75.1 million of minority interests.
 
(2)   Includes $91.6 million of advances to the Service Merchandise Joint Venture funded in the second quarter of 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:
                 
    December 31, 2005     December 31, 2004  
Land
  $ 894,477     $ 798,852  
Buildings
    2,480,025       2,298,424  
Fixtures and tenant improvements
    58,060       42,922  
Construction in progress
    37,550       25,151  
 
           
 
    3,470,112       3,165,349  
Accumulated depreciation
    (195,708 )     (143,170 )
 
           
Real estate, net
    3,274,404       3,022,179  
Receivables, including straight line rent, net
    76,744       68,596  
Leasehold interests
    23,297       26,727  
Other assets
    109,490       96,264  
 
           
 
  $ 3,483,935     $ 3,213,766  
 
           
 
               
Mortgage debt (a)
  $ 2,173,401     $ 1,803,420  
Notes and accrued interest payable to DDR
    108,020       20,616  
Amounts payable to other partners
          46,161  
Other liabilities
    78,406       75,979  
 
           
 
    2,359,827       1,946,176  
Accumulated equity
    1,124,108       1,267,590  
 
           
 
  $ 3,483,935     $ 3,213,766  
 
           
 
(a)   The Company’s proportionate share of joint venture debt aggregated approximately $510.5 million and $420.8 million at December 31, 2005 and December 31, 2004, respectively.

 

 

Exhibit 99.2
(DEVELOPERS LOGO)
Quarterly Financial Supplement
For the twelve months ended
December 31, 2005
Investor Relations Department
3300 Enterprise Parkway Beachwood, Ohio 44122
(216) 755-5500 (216) 755-1500 (fax)
www.ddr.com


 

Developers Diversified Realty
Quarterly Financial Supplement
For the twelve months ended December 31, 2005
 
 
     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 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 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
Quarterly Financial Supplement
For the twelve months ended December 31, 2005

 
 
TABLE OF CONTENTS
         
Section   Tab  
Earnings Release & Financial Statements
    1.0  
Financial Summary
    2.0  
Financial Highlights
    2.1  
Market Capitalization and Financial Ratios
    2.2  
Market Capitalization Summary
    2.3  
Significant Accounting Policies
    2.4  
Reconciliation of Supplemental Non-GAAP Financial Measures
    2.5  
(Same Store NOI, FFO and Summary of Consolidated and JV Transactional Income)
       
Consolidated and Wholly Owned Financial Operations
    3.0  
Summary of Capital Transactions
    3.1  
Acquisitions, Dispositions, Expansions and Developments
    3.2  
Summary of Consolidated Debt
    3.3  
Summary of Consolidated Mortgage Principal Payments and Corporate Debt Maturities
    3.4  
Joint Venture Summaries
    4.0  
Joint Venture Financials
    4.1  
Joint Venture Partnership Summaries
    4.2  
Joint Venture Financial Operations
    5.0  
Summary of Capital Transactions
    5.1  
Acquisitions, Dispositions, Expansions and Developments
    5.2  
Summary of Joint Venture Debt
    5.3  
Summary of Pro Rata Joint Venture Debt
    5.4  
Summary of Joint Venture Mortgage Principal Payments
    5.5  
Portfolio Statistics
    6.0  
Appendix
    7.0  
Property Listing
    7.1  
Investor Information
    7.2  


 

DEVELOPERS DIVERSIFIED REALTY CORPORATION
For Immediate Release :
         
Contact:
  Scott A. Wolstein   Michelle M. Dawson
 
  Chairman   Vice President of Investor Relations
 
  Chief Executive Officer   216-755-5455
 
  216-755-5500    
DEVELOPERS DIVERSIFIED REALTY REPORTS AN 8.8% INCREASE IN FFO
PER SHARE FOR THE YEAR ENDED DECEMBER 31, 2005

      CLEVELAND, OHIO, February 13, 2006 — Developers Diversified Realty Corporation (NYSE: DDR), a real estate investment trust (“REIT”), today announced that fourth quarter 2005 Funds From Operations (“FFO”), a widely accepted measure of REIT performance, on a per share basis was $0.74 (diluted and basic) as compared to $0.69 (diluted) and $0.70 (basic) per share for the same period in the previous year, an increase of 7.2% diluted and 5.7% basic. FFO available to common shareholders was $81.7 million for the quarter ended December 31, 2005, as compared to $73.0 million for the fourth quarter of 2004, an increase of 11.9%. Net income available to common shareholders for the three month period ended December 31, 2005 decreased 52.6% to $35.1 million or $0.32 per share (diluted and basic) compared to fourth quarter 2004 net income of $74.1 million, or $0.71 per share (diluted) and $0.72 per share (basic). The decrease in net income for the quarter ended December 31, 2005 is primarily related to a decrease in gain on sales of real estate assets and discontinued operations, of $43 million of which $37 million is excluded from the computation of FFO.
     On a per share basis, FFO (diluted) was $3.21 and $2.95 for the years ended December 31, 2005 and 2004, respectively, an increase of 8.8%. FFO available to common shareholders for the year ended December 31, 2005 was $355.1 million compared to FFO available to common shareholders for the year ended December 31, 2004 of $292.3 million. Net income available to common shareholders for the twelve month period ended December 31, 2005 was $227.5 million, or $2.08 per share (diluted) and $2.10 (basic) in 2005, compared to net income available to common shareholders of $219.1 million, or $2.24 per share (diluted) and $2.27 (basic) for 2004.
     Scott Wolstein, DDR’s Chairman and Chief Executive Officer stated, “I’m pleased to report this quarter’s earnings, which reflect outstanding tenant demand for space in our community center portfolio and strong portfolio fundamentals, as well as a strong balance sheet position, with significant cashflow liquidity and financial flexibility. Our year-end results reflect the growing strength of our asset class and successful execution of a focused and disciplined capital recycling strategy. We sold nearly $600 million in assets, which helped generate the capital needed to fund our development pipeline and expand our footprint into Puerto Rico and the Western U.S. through key portfolio acquisitions from Caribbean Property Group and Mervyns.”
     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 fourth quarter of 2005, the Company executed 101 new leases aggregating approximately 740,000 square feet and 182 renewals aggregating approximately 674,000 square feet. Rental rates on new leases increased by 29.2% to $14.35 per square foot and rental rates on renewals increased by 9.4% to $12.87 per square foot as compared to previously occupied rental rates. On a blended basis, rental rates for new leases and renewals increased by 14.2% to $13.56 per square foot. At December 31, 2005, the average annualized base rent per occupied square foot, including those properties owned through joint ventures, was $11.30.
     At December 31, 2005, the portfolio, including those properties owned through joint ventures, was 96.4% leased. Excluding the impact of the properties acquired from Benderson Development, Caribbean Property Group and Mervyns, the portfolio was also 96.4% leased, as compared to 95.4% at December 31, 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 December 31, 2005, the portfolio was 95.3% occupied. Excluding the impact of the properties acquired from Benderson Development, Caribbean Property Group and Mervyns, the portfolio was 95.1% occupied, as compared to 94.6% at December 31, 2004.
     Same store Net Operating Income (“NOI”) relating to Core Portfolio Properties (i.e., shopping center properties owned since January 1, 2004, including those owned through joint ventures and excluding properties under redevelopment) increased approximately $8.5 million (or 2.2%) for the year ended December 31, 2005.
Strategic Real Estate Transactions:
Mervyns Stores
     In mid September 2005, the Company formed a joint venture (the “Mervyns Joint Venture”) with Macquarie DDR Trust (“MDT”), which acquired the underlying real estate of 36 operating Mervyns stores. The Mervyns Joint Venture is owned 50% by the Company and 50% by MDT. However, the assets, liabilities and operating results are consolidated within the DDR accounts in accordance with FIN 46. The Mervyns Joint Venture acquired one additional asset in the fourth quarter of 2005 for approximately $20.7 million and the final asset was acquired by the joint venture for approximately $11.0 million in January 2006.

 


 

Expansions:
     During the year ended December 31, 2005, the Company completed nine expansions and redevelopment projects located in Hoover, Alabama; Tallahassee, Florida; Suwanee, Georgia; Princeton, New Jersey; Hendersonville, North Carolina; Allentown, Pennsylvania; Erie, Pennsylvania; Bayamon, Puerto Rico and Johnson City, Tennessee at an aggregate cost of $41.6 million. The Company is currently expanding/redeveloping eight shopping centers located in Gadsden, Alabama; Ocala, Florida; Stockbridge, Georgia; Ottumwa, Iowa; Gaylord, Michigan; Rome, New York; Mooresville, North Carolina and Bayamon, Puerto Rico at a projected incremental cost of approximately $38.5 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 year ended December 31, 2005, two of the Company’s joint ventures completed expansion/redevelopment projects at their shopping centers located in St. Petersburg, Florida and Merriam, Kansas at an aggregate cost of $9.3 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 $57.4 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 year ended December 31, 2005, the Company substantially completed the construction of four shopping center projects located in Overland Park, Kansas; Lansing, Michigan; Freehold, New Jersey and Mt. Laurel, New Jersey. Many of these tenants are open and operating.
     The Company currently has eight shopping center projects under construction. These projects are located in Miami, Florida; Nampa, Idaho; McHenry, Illinois; Chesterfield, Michigan; Horseheads, New York; Apex, North Carolina (Beaver Creek Crossings — Phase I); Pittsburgh, Pennsylvania and San Antonio, Texas. These projects are scheduled for completion during 2006 through 2007 at a projected aggregate cost of approximately $428.6 million and will create an additional 4.1 million square feet of retail space. At December 31, 2005, approximately $178.3 million of costs were incurred in relation to these development projects.
     The Company anticipates commencing construction in early 2006 on four additional shopping centers located in Homestead, Florida; Norwood, Massachusetts; Seabrook, New Hampshire 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 $119.3 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. The project located in San Antonio, Texas was substantially completed during 2005 and a portion of the project located in Jefferson County (St. Louis), Missouri has been substantially completed. The remaining projects are scheduled for completion during 2007. At December 31, 2005, approximately $60.7 million of costs were incurred in relation to these development projects.

 


 

Dispositions:
     In the fourth quarter of 2005, the Company sold three shopping center properties aggregating 0.1 million square feet for approximately $18.8 million and recognized a non-FFO gain of approximately $2.7 million.
     In December 2005, one of the Company’s joint ventures with Coventry Real Estate Partners sold a 0.3 million square foot shopping center in San Ysidro, California for approximately $42.5 million. The joint venture recognized an aggregate gain of approximately $9.1 million. In conjunction with this transaction, the Company recognized a contribution to FFO of $1.9 million, as the Company considers this sale part of its merchant build program due to the recent redevelopment of this former factory outlet center, which is reflected through its equity in earnings of joint ventures.
Financings:
     In October 2005, the Company issued $350 million of seven-year senior unsecured notes. The 5.375% notes are due on October 15, 2012 and were offered at 99.52% of par. The notes are redeemable prior to maturity at par value plus a make-whole premium. If the notes are redeemed within 90 days of the maturity date, no make-whole premium will be paid. The effective interest rate, after taking into account the treasury rate locks that were previously entered into by the Company, will adjust the seven-year rate to an effective rate of 5.1%. Proceeds from the offering were used for general corporate purposes, including repayment of floating rate debt on the Company’s revolving credit facilities.
     Developers Diversified Realty Corporation currently owns and manages approximately 500 retail operating and development properties in 44 states, plus Puerto Rico, comprising approximately 113 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     Year Ended  
    Ended December 31,     December 31,  
Revenues:   2005     2004     2005     2004  
Minimum rents (A)
  $ 137,805     $ 113,131     $ 512,206     $ 407,700  
Percentage and overage rents (A)
    5,417       2,916       10,299       7,572  
Recoveries from tenants
    43,227       33,749       158,076       116,975  
Ancillary income
    2,960       1,007       9,548       3,162  
Other property related income
    894       879       4,888       4,147  
Management fee income
    5,681       4,162       19,657       14,626  
Development fees
    1,289       587       3,202       2,311  
Other (B)
    1,174       931       9,300       13,081  
 
                       
 
    198,447       157,362       727,176       569,574  
 
                       
Expenses:
                               
Operating and maintenance
    28,402       20,812       98,549       64,742  
Real estate taxes
    23,284       20,441       85,592       73,601  
General and administrative (C)
    13,860       14,145       54,048       47,126  
Depreciation and amortization
    47,829       35,748       164,868       124,175  
 
                       
 
    113,375       91,146       403,057       309,644  
 
                       
Other income (expense):
                               
Interest income
    3,686       1,065       10,078       4,233  
Interest expense
    (50,845 )     (36,172 )     (182,279 )     (124,543 )
Other expense (D)
    (7 )     (320 )     (2,532 )     (1,779 )
 
                       
 
    (47,166 )     (35,427 )     (174,733 )     (122,089 )
 
                       
Income before equity in net income of joint ventures, minority equity interests, income tax of taxable REIT subsidiaries and franchise taxes, discontinued operations, gain on sales of real estate and cumulative effect of adoption of a new accounting standard
    37,906       30,789       149,386       137,841  
Equity in net income of joint ventures (E)
    8,890       10,409       34,873       40,895  
Minority equity interests (F)
    (2,677 )     (1,727 )     (7,881 )     (5,064 )
Income tax benefit (expense) of taxable REIT subsidiaries and franchise taxes
    213       789       (342 )     (1,469 )
 
                       
Income from continuing operations
    44,332       40,260       176,036       172,203  
Income from discontinued operations (G)
    2,455       9,438       18,467       15,918  
 
                       
Income before gain on sales of real estate and cumulative effect of adoption of a new accounting standard
    46,787       49,698       194,503       188,121  
Gain on sales of real estate, net of tax
    2,075       38,150       88,140       84,642  
 
                       
Income before cumulative effect of adoption of a new accounting standard
    48,862       87,848       282,643       272,763  
Cumulative effect of adoption of a new accounting standard (H)
                      (3,001 )
 
                       
Net income
  $ 48,862     $ 87,848     $ 282,643     $ 269,762  
 
                       
Net income, applicable to common shareholders
  $ 35,070     $ 74,055     $ 227,474     $ 219,056  
 
                       
Funds From Operations (“FFO”):
                               
Net income applicable to common shareholders
  $ 35,070     $ 74,055     $ 227,474     $ 219,056  
Depreciation and amortization of real estate investments
    46,610       37,647       169,117       130,536  
Equity in net income of joint ventures (E)
    (8,890 )     (10,409 )     (34,873 )     (40,895 )
Joint ventures’ FFO (E)
    11,864       11,824       49,302       46,209  
Minority equity interests (OP Units) (F)
    729       691       2,916       2,607  
Gain on sales of depreciable real estate, net
    (3,671 )     (40,778 )     (58,834 )     (68,179 )
Cumulative effect of adoption of a new accounting standard (H)
                      3,001  
 
                       
FFO available to common shareholders
    81,712       73,030       355,102       292,335  
Preferred dividends
    13,792       13,793       55,169       50,706  
 
                       
FFO
  $ 95,504     $ 86,823     $ 410,271     $ 343,041  
 
                       
Per share data:
                               
Earnings per common share
                               
Basic
  $ 0.32     $ 0.72     $ 2.10     $ 2.27  
 
                       
Diluted
  $ 0.32     $ 0.71     $ 2.08     $ 2.24  
 
                       
Dividends Declared
  $ 0.54     $ 0.51     $ 2.16     $ 1.94  
 
                       
Funds From Operations — Basic (I)
  $ 0.74     $ 0.70     $ 3.23     $ 2.98  
 
                       
Funds From Operations — Diluted (I)
  $ 0.74     $ 0.69     $ 3.21     $ 2.95  
 
                       
Basic — average shares outstanding (thousands) (I)
    108,523       102,979       108,310       96,638  
 
                       
Diluted — average shares outstanding (thousands) (I)
    109,168       105,264       109,142       99,024  
 
                       

 


 

DEVELOPERS DIVERSIFIED REALTY CORPORATION
Financial Highlights
(In thousands — except per share data)
 
(A)   Increases in base and percentage rental revenues for the twelve month period ended December 31, 2005 as compared to 2004, aggregated $100.2 million consisting of $4.9 million related to leasing of core portfolio properties (an increase of 1.9% from 2004), $132.7 million from the acquisition of assets and $9.8 million related to developments and redevelopments. These amounts were offset by a decrease of $2.6 million related to the Company’s remaining seven business center properties and $44.6 million due to the sale of properties in 2004 and 2005 to joint ventures. Included in the rental revenues for the twelve month periods ended December 31, 2005 and 2004 is approximately $14.4 million and $7.4 million, respectively, of revenue resulting from the recognition of straight line rents.
 
(B)   Other income for the three and twelve month periods ended December 31, 2005 and 2004 was comprised of the following (in millions):
                                 
    Three Month Period     Twelve Month Period  
    Ended December 31,     Ended December 31  
    2005     2004     2005     2004  
Lease termination fees and bankruptcy settlements
  $ 0.8     $ 0.7     $ 5.9     $ 9.8  
Financing fees
    0.1             2.4       3.0  
Other miscellaneous
    0.3       0.2       1.0       0.3  
 
                       
 
  $ 1.2     $ 0.9     $ 9.3     $ 13.1  
 
                       
(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 twelve month periods ended December 31, 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 and certain litigation costs. In 2005, the Company incurred certain litigation costs of $1.6 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     Twelve Month Period  
    Ended December 31,     Ended December 31,  
    2005     2004     2005     2004  
Revenues from operations (a)
  $ 112,467     $ 93,553     $ 428,587     $ 324,497  
 
                       
 
                               
Operating expense
    42,234       32,419       152,664       111,313  
Depreciation and amortization of real estate investments
    21,815       26,303       84,737       64,079  
Interest expense
    31,091       22,720       117,058       76,994  
 
                       
 
    95,140       81,442       354,459       252,386  
 
                       
Income from operations before gain on sales of real estate and discontinued operations
    17,327       12,111       74,128       72,111  
Gain (loss) on sales of real estate
    60       (38 )     858       4,787  
(Loss) income from discontinued operations, net of tax
    (905 )     1,379       (1,382 )     2,269  
Gain on sales of discontinued operations, net of tax
    13,527       14,727       48,982       39,612  
 
                       
Net income
  $ 30,009     $ 28,179     $ 122,586     $ 118,779  
 
                       
DDR Ownership interests (b)
  $ 8,775     $ 10,667     $ 36,828     $ 42,150  
 
                       
 
                               
Funds From Operations from joint ventures are summarized as follows:
                               
Net income
  $ 30,009     $ 28,179     $ 122,586     $ 118,779  
Gain on sales of real estate, including discontinued operations
    (6,287 )     (13,577 )     (19,014 )     (37,866 )
Depreciation and amortization of real estate investments
    22,029       27,891       87,508       68,456  
 
                       
 
  $ 45,751     $ 42,493     $ 191,080     $ 149,369  
 
                       
DDRC Ownership interests (b)
  $ 11,864     $ 11,824     $ 49,302     $ 46,209  
 
                       
DDRC Partnership distributions received, net (c)
  $ 12,927     $ 15,585     $ 126,647     $ 77,505  
 
                       

 


 

DEVELOPERS DIVERSIFIED REALTY CORPORATION
Financial Highlights
(In thousands — except per share data)
  (a)   Revenues for the three month periods ended December 31, 2005 and 2004 included approximately $1.1 million and $2.0 million, respectively, resulting from the recognition of straight line rents of which the Company’s proportionate share is $0.1 million and $0.4 million, respectively. Revenues for the twelve month periods ended December 31, 2005 and 2004 included approximately $6.6 million and $6.5 million, respectively, resulting from the recognition of straight line rents of which the Company’s proportionate share is $1.1 and $1.4 million, respectively.
 
  (b)   Included in the Company’s equity in net income and FFO from joint ventures for the twelve months ended December 31, 2004, is approximately $3.2 million of gain related to the sale of a 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 $0.3 million for the three month period ended December 31, 2004, and by $2.1 million and $1.3 million for the twelve month periods ended December 31, 2005 and 2004, respectively, to reflect additional basis depreciation and adjustments to gain on sales.
 
      At December 31, 2005 and 2004, the Company owned joint venture interests, excluding consolidated joint ventures, relating to 110 and 103 shopping center properties, respectively. In addition, at December 31, 2005 and 2004, respectively, the Company, through a joint venture, owned an interest of approximately 25% in 53 and 63 shopping center sites formerly owned by Service Merchandise, respectively.
 
  (c)   Distributions include funds received from asset sales and refinancings in addition to ongoing operating distributions.
(F)   Minority equity interests are comprised of the following (in thousands):
                                 
    Three Month Period     Twelve Month Period  
    Ended December 31,     Ended December 31,  
    2005     2004     2005     2004  
Minority interests
  $ 1,948     $ 1,036     $ 4,965     $ 2,457  
Operating partnership units
    729       691       2,916       2,607  
 
                       
 
  $ 2,677     $ 1,727     $ 7,881     $ 5,064  
 
                       
(G)   The operating results relating to assets classified as discontinued operations are summarized as follows (in thousands):
                                 
    Three Month Period     Twelve Month Period  
    Ended December 31,     Ended December 31,  
    2005     2004     2005     2004  
Revenues
  $ 249     $ 8,185     $ 21,395     $ 35,672  
 
                       
 
                               
Expenses:
                               
Operating
    392       3,165       9,139       13,402  
Impairment charge
                642       586  
Interest, net
    39       1,384       3,914       5,902  
Depreciation
    51       2,147       5,833       8,472  
Minority interests
    3       (7 )     67       (47 )
 
                       
Total expenses
    485       6,689       19,595       28,315  
 
                       
(Loss) income before gain on sales of real estate
    (236 )     1,496       1,800       7,357  
Gain on sales of real estate (1)
    2,691       7,942       16,667       8,561  
 
                       
Net income
  $ 2,455     $ 9,438     $ 18,467     $ 15,918  
 
                       

 


 

DEVELOPERS DIVERSIFIED REALTY CORPORATION
Financial Highlights
(In thousands — except per share data)
  (1)   During 2005, the Company’s gain on sales of real estate was reduced by $1.9 million relating to debt prepayment costs incurred as a result of the sales transaction. This debt prepayment has been accounted for as a cost of sale and neither the gross gain on sale nor the related costs of the sale have been included in FFO.
(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 Operating Partnership Units (OP Units) outstanding at December 31, 2005 and 2004 into 1.3 million and 1.4 million common shares of the Company for the three month periods ended December 31, 2005 and 2004, respectively, and 1.3 million for each of the twelve month periods ended December 31, 2005 and 2004, on a weighted average basis. The weighted average diluted shares and OP Units outstanding were 110.8 million and 105.4 million for the three month periods ended December 31, 2005 and 2004, respectively, and 110.7 million and 99.1 million for the twelve month periods ended December 31, 2005 and 2004, respectively.

 


 

DEVELOPERS DIVERSIFIED REALTY CORPORATION
Financial Highlights
(In thousands)
Selected Balance Sheet Data:
                 
    December 31, 2005 (1)     December 31, 2004  
Assets:
               
Real estate and rental property:
               
Land
  $ 1,721,321     $ 1,238,242  
Buildings
    4,806,373       3,998,972  
Fixtures and tenant improvements
    152,958       120,350  
Construction in progress
    348,685       245,860  
 
           
 
    7,029,337       5,603,424  
Less accumulated depreciation
    (692,823 )     (568,231 )
 
           
Real estate, net
    6,336,514       5,035,193  
 
               
Cash
    30,655       49,871  
Advances to and investments in joint ventures
    275,136 (2)     288,020  
Notes receivable
    24,996       17,823  
Receivables, including straight line rent, net
    112,464       84,843  
Other assets, net
    83,212       107,797  
 
           
 
  $ 6,862,977     $ 5,583,547  
 
           
 
               
Liabilities:
               
Indebtedness:
               
Revolving credit facilities
  $ 150,000     $ 60,000  
Variable rate unsecured term debt
    200,000       350,000  
Unsecured debt
    1,966,268       1,220,143  
Mortgage and other secured debt
    1,574,733       1,088,547  
 
           
 
    3,891,001       2,718,690  
Dividends payable
    65,799       62,089  
Other liabilities
    204,447       192,514  
 
           
 
    4,161,247       2,973,293  
Minority interests
    131,449       55,935  
Shareholders’ equity
    2,570,281       2,554,319  
 
           
 
  $ 6,862,977     $ 5,583,547  
 
           
 
(1)   Amounts include the consolidation of the Mervyns, 50% owned joint venture, formed in September 2005, which includes $394.7 million of real estate assets, $258.5 million of mortgage debt and $75.1 million of minority interests.
 
(2)   Includes $91.6 million of advances to the Service Merchandise Joint Venture funded in the second quarter of 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:
                 
    December 31, 2005     December 31, 2004  
Land
  $ 894,477     $ 798,852  
Buildings
    2,480,025       2,298,424  
Fixtures and tenant improvements
    58,060       42,922  
Construction in progress
    37,550       25,151  
 
           
 
    3,470,112       3,165,349  
Accumulated depreciation
    (195,708 )     (143,170 )
 
           
Real estate, net
    3,274,404       3,022,179  
Receivables, including straight line rent, net
    76,744       68,596  
Leasehold interests
    23,297       26,727  
Other assets
    109,490       96,264  
 
           
 
  $ 3,483,935     $ 3,213,766  
 
           
 
               
Mortgage debt (a)
  $ 2,173,401     $ 1,803,420  
Notes and accrued interest payable to DDR
    108,020       20,616  
Amounts payable to other partners
          46,161  
Other liabilities
    78,406       75,979  
 
           
 
    2,359,827       1,946,176  
Accumulated equity
    1,124,108       1,267,590  
 
           
 
  $ 3,483,935     $ 3,213,766  
 
           
 
(a)   The Company’s proportionate share of joint venture debt aggregated approximately $510.5 million and $420.8 million at December 31, 2005 and December 31, 2004, respectively.

 


 

Developers Diversified Realty
Quarterly Financial Supplement
For the Twelve Months Ended December 31, 2005
FINANCIAL HIGHLIGHTS
(In Thousands Except Per Share Information)
                                         
    Year Ended December 31  
    2005     2004     2003     2002     2001  
FUNDS FROM OPERATIONS:
                                       
Net Income Applicable to Common Shareholders
  $ 227,474     $ 219,056     $ 189,056   (7)   $ 69,368   (7)   $ 65,111  
Depreciation and Amortization of Real Estate Investments
  $ 169,117     $ 130,537     $ 93,173     $ 76,462     $ 63,200  
Equity in Net Income From Joint Ventures
( $ 34,873 ) ( $ 40,896 ) ( $ 52,917 ) ( $ 32,769 ) ( $ 17,010 )
Equity in Net Income From Minority Equity Investment
  $ 0     $ 0     $ 0     $ 0   ( $ 1,550 )
Joint Venture Funds From Operations
  $ 49,302     $ 46,209     $ 47,942     $ 44,473     $ 31,546  
Minority Equity Investment Funds From Operations
  $ 0     $ 0     $ 0     $ 0     $ 6,448  
Operating Partnership Minority Interest Expense
  $ 2,916     $ 2,607     $ 1,770     $ 1,450     $ 1,531  
Cumulative Effect & Extraordinary Charges
  $ 0     $ 3,001     $ 0     $ 0     $ 0  
Gain on Sales of Real Estate
( $ 58,834 ) ( $ 68,179 ) ( $ 67,352 ) ( $ 4,276 ) ( $ 16,688 )
 
                             
FUNDS FROM OPERATIONS AVAILABLE TO COMMON SHAREHOLDERS
  $ 355,102     $ 292,335     $ 211,672     $ 154,709     $ 132,587  
PREFERRED DIVIDENDS
  $ 55,169     $ 50,706     $ 51,204   (7)   $ 32,602   (7)   $ 27,262  
 
                             
FUNDS FROM OPERATIONS
  $ 410,271     $ 343,041     $ 262,877     $ 187,311     $ 159,849  
 
                             
 
                                       
PER SHARE INFORMATION:
                                       
Funds From Operations — Diluted
  $ 3.21     $ 2.95     $ 2.51     $ 2.35     $ 2.33  
Net Income — Diluted
  $ 2.08     $ 2.24     $ 2.27     $ 1.07     $ 1.17  
Cash Dividends
  $ 2.16     $ 1.94     $ 1.69     $ 1.52     $ 1.48  
 
                                       
WEIGHTED AVERAGE SHARES AND OPERATING PARTNERSHIP UNITS, FFO
    110,700       99,147       84,319       65,910       56,957  
 
                                       
TOTAL MARKET CAPITALIZATION (1)
  $ 9,781,900     $ 8,276,943     $ 5,551,748     $ 3,460,243     $ 2,982,461  
DEBT TO TOTAL MARKET CAPITALIZATION (1)
    39.77 %     32.82 %     37.42 %     43.10 %     43.87 %
DEBT TO TOTAL UNDEPRECIATED ASSETS, INVESTMENTS, CASH & NOTES REC.
    52.86 %     45.58 %     48.68 %     48.26 %     47.18 %
DIVIDEND PAYOUT RATIO (1)
    66.98 %     67.28 %     66.03 %     62.73 %     63.90 %
 
                                       
GEN. & ADMIN. EXPENSES AS A PERCENTAGE OF TOTAL REVENUES (2)
    4.55 %     4.94 %     5.35 %     4.80 %     4.25 %
 
                                       
GENERAL AND ADMINISTRATIVE EXPENSES
  $ 54,048     $ 47,126     $ 40,820     $ 29,392     $ 24,175  
 
                                       
REVENUES:
                                       
DDR Revenues
  $ 748,571     $ 605,246     $ 478,696     $ 360,778     $ 324,148  
Joint Venture Revenues
  $ 438,103     $ 348,740     $ 284,158     $ 251,905     $ 244,663  
 
                             
TOTAL REVENUES (3)
  $ 1,186,675     $ 953,987     $ 762,853     $ 612,683     $ 568,811  
 
                             
 
                                       
NET OPERATING INCOME:
                                       
DDR Net Operating Income
  $ 555,291     $ 453,501     $ 356,348     $ 272,764     $ 248,838  
Joint Venture Net Operating Income
  $ 280,617     $ 228,358     $ 184,927     $ 167,573     $ 166,545  
 
                             
TOTAL NET OPERATING INCOME (4)
  $ 835,907     $ 681,859     $ 541,274     $ 440,337     $ 415,383  
 
                             
 
                                       
REAL ESTATE AT COST:
                                       
DDR Real Estate at Cost
  $ 7,029,337     $ 5,603,424     $ 3,884,911     $ 2,804,056     $ 2,493,665  
Joint Venture Real Estate at Cost (5)
  $ 3,470,112     $ 3,165,335     $ 2,275,216     $ 1,785,165     $ 1,862,515  
 
                             
TOTAL REAL ESTATE AT COST (6)
  $ 10,499,449     $ 8,768,759     $ 6,160,127     $ 4,589,221     $ 4,356,179  
 
                             
 
(1)   See Market Capitalization and Financial Ratio section for detail calculation.
 
(2)   The calculation includes joint venture revenues.
 
(3)   Includes revenues from discontinued operations.
 
(4)   Includes NOI associated with acquisitions, expansions and developments from completion date of said capital transactions.
 
(5)   Includes FMV purchase price gross up of assets shown as equity investment in joint ventures.
 
(6)   Includes construction in progress (CIP) at December 31, 2005 of $386.2 million (includes $37.5 million of CIP included in joint ventures, of which $6.8 million represents the Company’s proportionate share), and at December 31, 2004, 2003, 2002, 2001 CIP aggregated $271.0 million, $290.7 million $237.8 million and $287.7 million, respectively.
 
(7)   Amounts were adjusted to include original issuance costs associated with the redemption of Preferred Operating Partnership Units and preferred stock of $10,710,000 for the year ended December 31, 2003 and $5,543,734 for the year ended December 31, 2002 pursuant to EITF topic NO. D-42.

Financial Highlights 2.1


 

Developers Diversified Realty
Quarterly Financial Supplement
For the Twelve Months Ended December 31, 2005
MARKET CAPITALIZATION & FINANCIAL RATIOS
                                         
    Year Ended December 31  
    2005     2004     2003     2002     2001  
DDR RATIO OF DEBT TO TOTAL MARKET CAP:
                                       
Total Debt
  $ 3,890,709     $ 2,716,426     $ 2,077,558     $ 1,491,481     $ 1,308,301  
Total Market Capitalization *
  $ 9,781,900     $ 8,276,943     $ 5,551,748     $ 3,460,243     $ 2,982,461  
 
                             
 
    39.77 %     32.82 %     37.42 %     43.10 %     43.87 %
 
                                       
DDR DEBT TO UNDEPRECIATED REAL ESTATE ASSETS, INVESTMENTS AND NOTES RECEIVABLE
    52.86 %     45.58 %     48.68 %     48.26 %     47.18 %
 
                                       
DDR, INCLUDING PROPORTIONATE SHARE OF JV DEBT, TOTAL MARKET CAPITALIZATION:
                                       
Total Debt *
  $ 4,401,169     $ 3,137,184     $ 2,446,026     $ 1,878,575     $ 1,688,904  
Total Market Capitalization *
  $ 10,292,361     $ 8,697,701     $ 5,920,216     $ 3,847,336     $ 3,363,064  
 
                             
 
    42.76 %     36.07 %     41.32 %     48.83 %     50.22 %
 
                                       
DDR & JV DEBT TO UNDEPRECIATED REAL ESTATE ASSETS, INVESTMENTS & NOTES RECEIVABLE
    55.84 %     49.27 %     53.79 %     54.20 %     53.85 %
 
                                       
INTEREST COVERAGE RATIO:
                                       
Interest Expense
  $ 186,196     $ 130,447     $ 90,162     $ 77,208     $ 81,770  
FFO Before Interest and Preferred Dividends *
  $ 596,466     $ 473,488     $ 353,039     $ 282,856     $ 260,700  
 
                             
 
    3.20       3.63       3.92       3.66       3.19  
 
                                       
DEBT SERVICE COVERAGE RATIO:
                                       
Debt Service *
  $ 219,349     $ 152,927     $ 101,890     $ 83,958     $ 88,764  
FFO Before Interest and Preferred Dividends *
  $ 596,466     $ 473,488     $ 353,039     $ 282,856     $ 260,700  
 
                             
 
    2.72       3.10       3.46       3.37       2.94  
 
                                       
FIXED CHARGES (INCLUDING PREFERRED DIVIDENDS) COVERAGE RATIO
                                       
Fixed Charges
  $ 274,518     $ 203,633     $ 142,385     $ 129,353     $ 135,107  
FFO Before Interest and Preferred Dividends *
  $ 596,466     $ 473,488     $ 353,039     $ 282,856     $ 260,700  
 
                             
 
    2.17       2.33       2.48       2.19       1.93  
 
                                       
DIVIDEND PAYOUT RATIO
                                       
Common Share Dividends and Operating Partnership Interest
  $ 237,856     $ 196,685     $ 146,846     $ 100,531     $ 84,721  
Funds From Operations exclusive of charge associated with preferred stock redemption
  $ 355,102     $ 292,335     $ 222,382     $ 160,253     $ 132,587  
 
                             
 
    0.67       0.67       0.66       0.63       0.64  
 
*   See Attached for Detail Calculation

Market Capitalization and Financial Ratios 2.2


 

Developers Diversified Realty
Quarterly Financial Supplement
For the Twelve Months Ended December 31, 2005
                                         
    Year Ended December 31  
    2005     2004     2003     2002     2001  
DDR TOTAL MARKET CAPITALIZATION
                                       
Common Shares Outstanding
    108,948       108,083       86,425       66,609       59,455  
Operating Partnership Units Outstanding
    1,350       1,350       1,129       911       1,038  
 
                             
Total
    110,298       109,432       87,554       67,520       60,493  
Share Price
  $ 47.02     $ 44.37     $ 33.57     $ 21.99     $ 19.10  
 
                             
Market Value of Common Shares
  $ 5,186,192     $ 4,855,516     $ 2,939,190     $ 1,484,762     $ 1,155,410  
 
                                       
Preferred Shares at Book Value
  $ 705,000     $ 705,000     $ 535,000     $ 304,000     $ 303,750  
Preferred Units and Warrant
  $ 0     $ 0     $ 0     $ 180,000     $ 215,000  
Total Debt
  $ 3,890,709   (1)   $ 2,716,426     $ 2,077,558     $ 1,491,481     $ 1,308,301  
 
                             
TOTAL MARKET CAPITALIZATION
  $ 9,781,900     $ 8,276,943     $ 5,551,748     $ 3,460,243     $ 2,982,461  
 
                             
 
                                       
DDR TOTAL MARKET CAPITALIZATION — INCLUDING PROPORTIONATE SHARE OF JV DEBT
                                       
Common Shares Outstanding
    108,948       108,083       86,425       66,609       59,455  
Operating Partnership Units Outstanding
    1,350       1,350       1,129       911       1,038  
 
                             
Total
    110,298       109,432       87,554       67,520       60,493  
Share Price
  $ 47.02     $ 44.37     $ 33.57     $ 21.99     $ 19.10  
 
                             
Market Value of Common Shares
  $ 5,186,192     $ 4,855,516     $ 2,939,190     $ 1,484,762     $ 1,155,410  
 
                                       
Preferred Shares at Book Value
  $ 705,000     $ 705,000     $ 535,000     $ 304,000     $ 303,750  
Preferred Units and Warrant
  $ 0     $ 0     $ 0     $ 180,000     $ 215,000  
Total Debt
  $ 3,890,709   (1)   $ 2,716,426     $ 2,077,558     $ 1,491,481     $ 1,308,301  
Proportionate Share of JV Debt
  $ 510,460     $ 420,758     $ 368,468     $ 387,094     $ 380,604  
 
                             
TOTAL MARKET CAPITALIZATION
  $ 10,292,361     $ 8,697,701     $ 5,920,216     $ 3,847,336     $ 3,363,064  
 
                             
 
(1)   Includes $258 million of consolidated debt relating to a 50% owned joint venture, treatment is conservative.

Market Capitalization and Financial Ratios 2.2


 

Developers Diversified Realty
Quarterly Financial Supplement
For the Twelve Months Ended December 31, 2005
                                         
    Year Ended December 31  
    2005     2004     2003     2002     2001  
UNDEPRECIATED REAL ESTATE ASSETS, CASH, INVESTMENTS & NOTES RECEIVABLE
                                       
Undepreciated Real Estate Assets
  $ 7,029,337     $ 5,603,424     $ 3,884,911     $ 2,804,056     $ 2,493,665  
Cash and Cash Equivalents
  $ 30,655     $ 49,871     $ 111,033     $ 16,371     $ 19,070  
Notes Receivable
  $ 24,996     $ 17,823     $ 9,813     $ 11,662     $ 5,221  
Advances and Investments in Joint Ventures
  $ 275,136     $ 288,020     $ 262,072     $ 258,611     $ 255,327  
 
                             
 
  $ 7,360,124     $ 5,959,138     $ 4,267,829     $ 3,090,699     $ 2,773,281  
 
                             
DDR & JV UNDEPRECIATED REAL ESTATE ASSETS, INVESTMENTS & NOTES RECEIVABLE
                                       
Undepreciated Real Estate Assets
  $ 7,029,337     $ 5,603,424     $ 3,884,911     $ 2,804,056     $ 2,493,665  
Notes Receivable or Proportionate Share Thereof
  $ 116,212     $ 44,536     $ 41,018     $ 50,521     $ 22,000  
Proportionate Share of JV Undepreciated Real Estate Assets
  $ 736,109     $ 719,619     $ 621,113     $ 611,224     $ 620,688  
 
                             
 
  $ 7,881,658     $ 6,367,578     $ 4,547,043     $ 3,465,801     $ 3,136,353  
 
                             
FUNDS FROM OPERATIONS BEFORE INTEREST AND PREFERRED DIVIDENDS
                                       
FFO
  $ 355,102     $ 292,335     $ 211,672     $ 154,709     $ 132,587  
Interest Expense
  $ 186,196     $ 130,447     $ 90,162     $ 77,208     $ 81,770  
Preferred Dividends, Including Preferred Operating Minority Interest & D-42 Dividend
  $ 55,169     $ 50,706     $ 51,204     $ 50,939     $ 46,343  
 
                             
 
  $ 596,466     $ 473,488     $ 353,039     $ 282,856     $ 260,700  
 
                             
DEBT SERVICE
                                       
Interest Expense
  $ 186,196     $ 130,447     $ 90,162     $ 77,208     $ 81,770  
Recurring Principal Amortization
  $ 33,154     $ 22,480     $ 11,728     $ 6,750     $ 6,994  
 
                             
 
  $ 219,349     $ 152,927     $ 101,890     $ 83,958     $ 88,764  
 
                             
FIXED CHARGES
                                       
Debt Service
  $ 219,349     $ 152,927     $ 101,890     $ 83,958     $ 88,764  
Preferred Dividends, Including Preferred Operating Minority Interest and excluding non-case
  $ 55,169     $ 50,706     $ 40,494     $ 45,395     $ 46,343  
 
                             
D-42 dividend.
  $ 274,518     $ 203,633     $ 142,385     $ 129,353     $ 135,107  
 
                             

Market Capitalization and Financial Ratios 2.2


 

$9.8 Billion Total Capitalization as of December 31, 2005 Common Shares Equity (2) $5,186.2 53% Perpetual Preferred Stock $705.0 7% Fixed Rate Unsecured Debt $1,906.0 19% Floating Rate Unsecured Debt $60.0 1% Construction Finance $66.9 1% Variable Rate Revolving Credit and Term Debt $570.0 6% Mortgage Debt (3) $1,287.8 13% (1) Figures in millions unless otherwise noted. (2) Market Value ($47.02 per share as of December 31, 2005) includes operating partnership units equivalent to approximately 1.3 million of the Company's Common shares. (3) Does not include proportionate share of joint venture debt aggregating $ 510.5 million.


 

Developers Diversified Realty
Quarterly Financial Supplement
For the twelve months ended December 31, 2005

 
 

 
Significant Accounting Policies
Revenues
  Percentage and overage rents are recognized after the tenants reported sales have exceeded the applicable sales breakpoint.
  Revenues associated with tenant reimbursements are recognized in the period in which the expenses are incurred based upon the provision of tenants’ leases.
  Lease termination fees are included in other income and recognized upon termination of a tenant’s lease, which generally coincides with the receipt of cash.
General and Administrative Expenses
  General and administrative expenses include internal leasing salaries, legal salaries and related expenses associated with the leasing of space which are charged to operations as incurred. All indirect internal costs associated with acquisitions are expensed as incurred.
Deferred Financing Costs
  Costs incurred in obtaining long-term financing are included in deferred charges and are amortized over the terms of the related debt agreements; such amortization is reflected as interest expense in the consolidated statements of operations.
Real Estate
  Real estate assets are stated at cost less accumulated depreciation, which, in the opinion of management, is not in excess of the individual property’s estimated undiscounted future cash flows, including estimated proceeds from disposition.
  Depreciation and amortization are provided on a straight-line basis over the estimated useful lives of the assets as follows:
     
Buildings
  18 to 31 years
Furniture/Fixtures
  Useful lives, which approximate lease
and Tenant Improvements
  terms, where applicable
 


Significant Accounting Policies 2.4

 


 

Developers Diversified Realty
Quarterly Financial Supplement
For the twelve months ended December 31, 2005

 
 

 
Significant Accounting Policies (Continued)
  Expenditures for maintenance and repairs are charged to operations as incurred. Renovations that improve or extend the life of the asset are capitalized.
  Included in land is undeveloped real estate, generally outlots or expansion pads adjacent to the shopping centers and enclosed malls owned by the Company.
  Construction in progress includes shopping center developments and significant expansions and re-developments.
Capitalization
  The Company capitalizes interest on funds used for the construction or expansion of shopping centers. Capitalization of interest ceases when construction activities are completed and the property is available for occupancy by tenants.
  For the years ended December 31, 2005, 2004, 2003, 2002 and 2001, the Company capitalized interest of $12.5 million, $10.0 million, $11.4 million, $9.5 million and $12.9 million, respectively.
  In addition, the Company capitalized certain construction administration costs of $6.2 million for the year ended December 31, 2005 and $5.5 million, $5.1 million, $4.5 million and $3.3 million for the years ended December 31, 2004, 2003, 2002 and 2001, respectively.
  Interest and real estate taxes incurred during the construction period are capitalized and depreciated over the building life.
Gain on Sales of Real Estate
  Gain on sales of real estate generally related to the sale of outlots and land adjacent to existing shopping centers is recognized at closing when the earnings process is deemed to be complete.
 


Significant Accounting Policies 2.4

 


 

Developers Diversified Realty
Quarterly Financial Supplement
For the twelve months ended December 31, 2005
 
Reconciliation of Supplemental
Non-GAAP Financial Measures

(Dollars in thousands)
(Unaudited)
Table 1 — Developers Diversified Realty Corporation and the Company’s Joint Ventures Combined
Reconciliation of Same Store Net Operating Income (NOI) to Total Revenues and Certain Expenses
                         
    Twelve Month Period          
    December 31,          
    2005     2004          
Total Revenues DDR
  $ 727,176     $ 569,574          
Total Revenues DDR Combined Joint Ventures
    428,587       324,497          
Operating and Maintenance — DDR
    (98,549 )     (64,742 )        
Real Estate Taxes — DDR
    (85,592 )     (73,601 )        
Operating and Maintenance — DDR Combined Joint Ventures
    (152,664 )     (111,313 )        
 
                   
 
                       
Combined NOI
  $ 818,958     $ 644,415          
 
                   
 
                       
Total Same Store NOI
  $ 392,779     $ 384,253       2.2 %
Property NOI from other operating segments
    426,179       260,162          
 
                   
 
                       
Combined NOI
  $ 818,958     $ 644,415          
 
                   
Reconciliation of Supplemental Non-GAAP Financial Measures 2.5

 


 

Developers Diversified Realty
Quarterly Financial Supplement
For the twelve months ended December 31, 2005
 
Reconciliation of Supplemental
Non-GAAP Financial Measures

(Dollars in thousands)
(Unaudited)
Table 2 — Developers Diversified Realty Corporation
Reconciliation of Funds From Operations (FFO):
                                 
    Three Month Period     Twelve Month Period  
    Ended December 31,     Ended December 31,  
    2005     2004     2005     2004  
FUNDS FROM OPERATIONS:
                               
Net Income Applicable to Common Shareholders
  $ 35,070     $ 74,055     $ 227,474     $ 219,056  
Depreciation and Amortization of Real Estate Investments
    46,610       37,647       169,117       130,536  
Equity in Net Income From Joint Ventures
    (8,890 )     (10,409 )     (34,873 )     (40,895 )
Joint Venture Funds From Operations
    11,864       11,824       49,302       46,209  
Operating Partnership Minority Interest Expense
    729       691       2,916       2,607  
Gain on Sales of Real Estate
    (3,671 )     (40,778 )     (58,834 )     (68,179 )
Cumulative effect of adoption of a new accounting standard
                      3,001  
 
                       
FUNDS FROM OPERATIONS AVAILABLE TO COMMON SHAREHOLDERS
  $ 81,712     $ 73,030     $ 355,102     $ 292,335  
 
                       
 
                               
Preferred dividend charges in accordance with EITF Topic No. D-42
    13,792       13,793       55,169       50,706  
 
                       
ADJUSTED FUNDS FROM OPERATIONS AVAILABLE TO COMMON SHAREHOLDERS
  $ 95,504     $ 86,823     $ 410,271     $ 343,041  
 
                       
Reconciliation of Supplemental Non-GAAP Financial Measures 2.5

 


 

Developers Diversified Realty
Quarterly Financial Supplement
For the twelve months ended December 31, 2005
 

Reconciliation of Supplemental
Non-GAAP Financial Measures

(Dollars in thousands)
(Unaudited)
Table 3 — Developers Diversified Realty Corporation
Summary of Consolidated Transactional Income
                                     
    Three Month Period     Twelve Month Period      
    Ended December 31,     Ended December 31,      
    2005     2004     2005     2004     Income Statement Caption
Transactional Income Included in FFO
                                   
Consolidated
                                   
Merchant Building Gains, Net
  $ 1,073     $ 1,147     $ 40,780     $ 11,365     Gain on Sales of Real Estate
Land Sale Gains
    22       4,167       5,193       13,659     Gain on Sales of Real Estate
 
                           
 
  $ 1,095     $ 5,314     $ 45,973     $ 25,024      
 
                           
Transactional Income NOT Included in FFO
                                   
Consolidated
                                   
Gain on Sales
  $ 980     $ 32,836     $ 42,167     $ 59,618     Gain on Sales of Real Estate
Gain on Sales from Discontinued Operations
    2,691       7,942       16,667       8,561     Gain on Sales of Discontinued Operations
 
                           
 
  $ 3,671     $ 40,778     $ 58,834     $ 68,179     FFO Reconciliation
 
                           
Gain on Sales of Real Estate
                                   
Merchant Building Gains, Net
  $ 1,073     $ 1,147     $ 40,780     $ 11,365      
Land Sale Gains
    22       4,167       5,193       13,659      
Gain on Sales
    980       32,836       42,167       59,618      
 
                           
 
  $ 2,075     $ 38,150     $ 88,140     $ 84,642     Consolidated Income Statement
 
                           
Gain on Sales of Real Estate From Discontinued Operations
                                   
Gain on Sales from Discontinued Operations
  $ 2,691     $ 7,942     $ 16,667     $ 8,561     Consolidated Income Statement
 
                           

Reconciliation of Supplemental Non-GAAP Financial Measures 2.5

 


 

Developers Diversified Realty
Quarterly Financial Supplement
For the twelve months ended December 31, 2005
 

Reconciliation of Supplemental
Non-GAAP Financial Measures

(Dollars in thousands)
(Unaudited)
Table 4 — Developers Diversified Realty Corporation
Summary of Joint Venture Transactional Income
                                     
    Three Month Period     Twelve Month Period      
    Ended December 31,     Ended December 31,      
    2005     2004     2005     2004     Income Statement Caption
Transactional Income Included in FFO
                                   
Joint Ventures
                                   
Gain on Sales from Discontinued Operations
  $ 7,300     $ 1,112     $ 30,826     $ 2,000     Gain on Sales of Real Estate
Land Sales Gains
                      4,533     Gain on Sales of Real Estate
Deferred DDR Gain
                      3,256     (1)
 
                           
 
  $ 7,300     $ 1,112     $ 30,826     $ 9,789      
 
                           
DDR’s Proportionate Share
  $ 2,359     $ 274     $ 7,571     $ 4,907      
 
                           
Transactional Income NOT Included in FFO
                                   
Joint Ventures
                                   
Gain on Sales from Discontinued Operations
  $ 6,227     $ 13,615     $ 18,156     $ 37,612     Gain on Sales of Real Estate
Other Gains (losses) on Sales
    60       (38 )     858       254     Gain on Sales of Real Estate
 
                           
 
  $ 6,287     $ 13,577     $ 19,014     $ 37,866     FFO Reconciliation
 
                           
DDR’s Proportionate Share
  $ 1,691     $ 4,164     $ 6,301     $ 12,720      
 
                           
Gain (loss) on Sales of Real Estate
                                   
Land Sales Gains
  $     $     $     $ 4,533      
Other Gains (losses) on Sales
    60       (38 )     858       254      
 
                           
 
  $ 60     $ (38 )   $ 858     $ 4,787     Gain (loss) on Sales of Real Estate
 
                           
Gain on Sales of Real Estate From Discontinued Operations
                                   
Gain on Sales from Discontinued Operations Included in FFO
  $ 7,300     $ 1,112     $ 30,826     $ 2,000      
Gain on Sales from Discontinued Operations NOT Included in FFO
    6,227       13,615       18,156       37,612      
 
                           
 
  $ 13,527     $ 14,727     $ 48,982     $ 39,612     Gain on Sales of Discontinued Operations
 
                           
(1) Included in the Company’s equity in net income and FFO from joint ventures for the twelve months ended December 31, 2004, is approximately $3.2 million of gain related to the sale of a 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.

Reconciliation of Supplemental Non-GAAP Financial Measures 2.5

 


 

Developers Diversified Realty
Quarterly Financial Supplement
For the twelve months ended December 31, 2005
Summary of Wholly Owned and Consolidated Capital Transactions
Acquisitions, Dispositions, Developments & Expansions
for the Twelve Month Period Ended December 31, 2005
                                         
    Year Ended     Year Ended     Year Ended     Year Ended     Year Ended  
    December 31,     December 31,     December 31,     December 31,     December 31,  
    2005     2004     2003     2002     2001  
Acquisitions/Transfers
  $ 1,610.8 (1)   $ 2,170.8 (5)   $ 1,363.6 (7)   $ 298.6 (9)   $ 289.3 (11)
Completed Expansions
    41.6       25.2       26.8       8.0       13.7  
Developments & Construction in Progress
    246.1       203.8       104.6       66.4       72.9  
Tenant Improvements & Building Renovations
    7.5 (2)     6.6       6.3       7.3       6.1  
Furniture Fixtures & Equipment
    10.7 (3)     1.3       1.9       2.3       2.5  
 
                             
 
    1,916.7       2,407.7       1,503.2     $ 382.6     $ 384.5  
Less: Real Estate Sales & Joint Venture Transfers
    (490.8) (4)     (689.2) (6)     (422.4) (8)     ($72.2) (10)     ($52.7 )
 
                             
 
Total DDR Net Additions (Millions)
  $ 1,425.9     $ 1,718.5     $ 1,080.8     $ 310.4     $ 331.8  
 
(1)
  Includes transfer to DDR from joint ventures of the Dublin, OH shopping center, which has an aggregate cost of $36.2 million and a $5.4 million basis adjustment to the Benderson acquisition relating to master lease adjustments.
 
(2)
  The Company anticipates recurring capital expenditures, including tenant improvements, of approx. $8.0 million associated with its wholly owned and consolidated portfolio during 2006.
 
(3)
  The large increase in FF& E in 2005 is primarily attributed to certain IT projects, expansion of corporate headquarters, and fractional ownership interest in corporate jets.
 
(4)
  In addition to the asset sales this balance includes the transfer of twelve assets with an aggregate cost of $258.6 million to the Macquarie DDR Trust joint venture and the sale of several outparcels.
 
(5)
  Includes the acquisition of the Benderson portfolio aggregating $2,014.4 million, the consolidation of certain joint venture assets aggregating $37.9 million due to FIN 46 and transfers to DDR from joint ventures of the Littleton, CO and Merriam, KS shopping centers which had an aggregate value of $111.8 million. This also includes the purchase of DDR corporate headquarters for $6.7 million.
 
(6)
  In addition to the asset sales which had an aggregate cost of $62.6 million, this balance includes the sale of several land parcels with an aggregate cost of $41.1 million. This balance also includes the transfer of twelve assets with an aggregate cost of $258.3 million to the Macquarie DDR Trust joint venture, the transfer of twelve assets with an aggregate cost of $124.0 to the DPG Realty Holdings joint venture and the transfer of thirteen assets with an aggregate cost of $203.2 to the DDR Markaz II joint venture.
 
(7)
  Includes the merger of JDN which had an aggregate value of $1,064.0, the acquisition of a shopping center in Broomfield, CO aggregating $55.5, and the transfer from joint ventures of the Leawood, KS and Suwanee, GA shopping centers aggregating $125.9, and the consolidation of the assets aggregating $118.2 million owned by DD Development Company.
 
(8)
  In addition to asset sales which had an aggregate cost of $62.9 million, this balance includes the transfer of seven assets with an aggregate cost of $153.6 million to the joint venture with DDR Markaz LLC (Kuwait Financial Centre), these assets are shopping centers located in Richmond, CA, Winchester, VA, Tampa, FL, Toledo, OH, Highland, IN, Oviedo, FL and Grove City, OH and the sale of several outparcels, which had an aggregate cost of $13.5 million. The balance also includes the transfer of six assets with an aggregate cost of $192.4 million to the Macquarie DDR Trust joint venture, these assets are shopping centers located in Canton, OH, North Olmsted, OH, Independence, MO and St. Paul, MN.
 
(9)
  Includes transfers from joint ventures of the Independence, MO shopping center, Phase IV of the Salisbury, MD shopping center, Canton, OH shopping center, Plainville, CT shopping center, and San Antonio, TX shopping center to DDR.
 
(10)
  Includes a transfer to joint ventures for the newly developed shopping center in Kildeer, Illinois, the sales of shopping centers located in Cape Coral, Florida, Huntsville, Alabama, Ocala, Florida, Orlando, Florida and St. Louis, Missouri, the sale of three outlots, and a write-off of $5.0 million relating to the former K-mart space at North Little Rock, Arkansas which is being redeveloped.
 
(11)
  The balance reflects the consolidation of the assets formerly owned by American Industrial Properties (AIP) which was merged during 2nd quarter 2001.
     
Summary of Wholly Owned Capital Transactions 3.1

 


 

Developers Diversified Realty
Quarterly Financial Supplement
For the twelve months ended December 31, 2005
Wholly Owned and Consolidated Acquisitions
for the Twelve Month Period Ended December 31, 2005
                     
            Cost   Acquisition    
Property Location   GLA   (1)   (Millions)   Date   Major Tenants
Caribbean Property Group
  4,851,922       $1,160.1   01/27/05   Portfolio of 15 operating properties located in Puerto Rico
                     
Mervyns
  2,821,621       $   409.1   09/16/05   Portfolio of 37 open and operating Mervyns stores
                     
 
Total
  7,673,543       $1,569.2        
 
(1)
  GLA may include property managed, but not owned.
     
Wholly Owned and Consolidated Dispositions
for the Twelve Month Period Ended December 31, 2005
                                 
            Gross Sale                
            Proceeds                
Property Location   GLA     (Millions)     Sale Date          
Wilmington, OH
    55,130     $ 2.0       5/17/2005          
Cleveland, OH
    49,420     $ 2.2       6/30/2005          
Hillsboro, OH
    58,564     $ 1.2       7/12/2005          
Ashland, OH
    110,505     $ 0.8       7/12/2005          
Melbourne, FL
    121,913     $ 1.1       7/25/2005          
Connersville, IN
    141,770     $ 8.6       9/20/2005          
American Industrial Properties
    3,213,001     $ 177.0       9/30/2005          
Fern Park, FL
    16,000     $ 1.0       10/11/2005          
Ft. Worth, TX
    68,492     $ 10.6       11/01/2005          
Memphis, TN
    64,223     $ 7.2       12/20/2005          
 
Total
    3,899,018     $ 211.7                  
 
Wholly Owned Acquisitions and Dispositions 3.2

 


 

Developers Diversified Realty
Quarterly Financial Supplement
For the twelve months ended December 31, 2005
Wholly Owned and Consolidated
Expansion and Redevelopment Projects
for the Twelve Month Period Ended December 31, 2005
     
Projects Completed    
 
Hoover, AL
  Constructed a David’s Bridal (opened 7/05), West Marine (opened 12/05) and renovated the shopping center.
 
   
Tallahassee, FL
  Retenanting of former Lowe’s with Bealls (opened 04/04), Cato and It’s Fashion (opened 01/05) and an additional junior anchor.
 
   
Suwanee, GA
  Retenanting of former K-Mart with PetsMart (opened 4/05) and Shoe Gallery (opened 03/04), and Borders (opened 11/05).
 
   
Princeton, NJ
  Expansion of the shopping center to create a Babies ‘R Us (opened 9/05) and additional 39,600 sf of retail space including West Elm (opened 10/05), Yankee Candle (opened 12/05), Snip Its, Barbeques Galore, and other retailers to be announced.
 
   
Hendersonville, NC
  Recapture of former Wal-Mart space; redemised for Epic Theater (opened 6/05), Big Lots (opened 4/05) and an additional junior anchor.
 
   
Allentown, PA
  Construction of 18,200 sf outparcel building for retail tenants including Sleepys, Cost Cutters, Quiznos, Cold Stone Creamery, Game Stop, Tutoring Club, (all opened 3rd quarter 2005) and other retailers to be announced.
 
   
Erie, PA
  Construction of a 6,700 sf free standing building for retail tenants including Subway, Best Cuts and other retailers to be announced.
 
   
Bayamon, PR (Plaza Del Sol)
  Construction of parking deck expansion to accommodate a new junior anchor.
 
   
Johnson City, TN
  Kohl’s constructed 88,248 sf store (opened 4/05), plus construction of 25,000 sf additional retail space.
                         
                 
Total Net Cost (Millions)
  $ 41.6                  
                 
     
Projects in Progress    
 
Gadsden, AL
  Break-up of 64,400 sf building to create a Fred's (opened 05/04), a Burke's Outlet (opened 12/04) and another junior anchor.
 
   
Ocala, FL
  Recaptured the Winn Dixie and expanding the space by 6,000 sf for Hobby Lobby.
 
   
Stockbridge, GA
  Redemised space to accommodate a Northern Tool (opened 10/05) and other junior anchors to be announced.
 
   
Ottumwa, IA
  Recaptured Wal-Mart and release to Goody's (opened 9/04) and 47,422 sf of additional junior anchor stores.
 
   
Gaylord, MI
  Recaptured Wal-Mart and release to Big Lots, Dunhams and 39,767 sf of additional junior anchor stores.
 
   
Rome, NY
  Expansion of the shopping center to accommodate a new Marshall's (scheduled to open 1st quarter 2006).
 
   
Mooresville, NC
  Construction of a Gander Mountain and relocation of Rugged Warehouse (opened 7/05).
 
   
Bayamon, PR (Rio Hondo)
  Expansion of the shopping center to construct a Super Marshall's (opened 11/05), a Comp USA in the former Marshall's space (scheduled to open 2nd quarter 2006), and 19,800 sf of small shops and a freestanding outparcel.
                         
                 
Total Net Cost (Millions)
  $ 38.5                  
                 
     
Projects to Commence Construction    
 
Amherst, NY
  Construct 5,300 sf free standing building for retail shops.
Wholly Owned Expansions and Redevelopments 3.2

 


 

Developers Diversified Realty
Quarterly Financial Supplement
For the twelve months ended December 31, 2005
Summary of Wholly Owned and Consolidated Development Projects
for the Twelve Month Period Ended December 31, 2005
                             
                    Substantial    
            Net Cost   Completion    
    GLA   (Millions)   Date   Major Tenants
Projects Substantially Completed
                           
 
Overland Park, KS
    410,554 (1)   $ 9.2       2005     Home Depot, Sam's Club, Aldi's Grocery, Party City, Goodyear Tire, Bank of America, Babies 'R Us (opened 12/04), Golf Galaxy (opened 3/05), CiCi's Pizza(opened 5/05) and 3,427 sf of additional retail space
 
                           
Lansing, MI
    465,248 (1)   $ 17.4       2005     Wal-Mart, Lowe's, Michael's, Gander Mountain, PetsMart (opened 6/05)
 
                           
Freehold, NJ
    500,000     $ 29.7       2005     Wal-Mart and Sam's Club (scheduled to open 1st quarter 2006) and other retail tenants and outparcels to be announced
 
                           
Mt. Laurel, NJ
    715,251 (1)   $ 57.4       2004 &
2005
    Target, Bed, Bath & Beyond, Lane Bryant, Payless ShoeSource (opened 4th quarter 2004). Costco and Panera Bread (opened 1st quarter 2005). TJ Maxx, PetsMart, JoAnn's, DSW, and Golf Galaxy (opened 2nd quarter 2005), and The Sports Authority (opened 3rd quarter 2005), Wegman's (scheduled to open 1st quarter 2006), and other retail tenants and outparcels to be announced
Projects in Progress
                           
 
Miami, FL
    634,211     $ 103.9       2006 & 2007     To be announced
 
                           
Nampa, ID
    675,951     $ 52.6       2006 & 2007     To be announced
 
                           
McHenry, IL
    451,080 (1)   $ 58.9       2006 & 2007     Dick's and other retail tenants to be announced
 
                           
Chesterfield, MI
    256,549 (1)   $ 12.5       2005 & 2006     Wal-Mart and 25,400 sf of small shop retail and additional retail space
 
                           
Horseheads, NY
    684,866 (1)   $ 48.4       2007     To be announced
 
                           
Apex, NC (Beaver Creek Crossings-Phase I) (2)
    345,254     $ 56.6       2006     Consolidated Theaters (scheduled to open 2nd quarter 2006) and other retail tenants to be announced
 
                           
Pittsburgh, PA
    367,273 (1)   $ 16.2       2006     Target, Sportsmans Warehouse (opened 11/05), Sam's Club (scheduled to open 2nd quarter 2006) and other retail tenants and restaurants to be announced
 
                           
San Antonio, TX (Stone Oak) (3)
    664,495 (1)   $ 79.5       2007     Target and other tenants to be announced
 
                           
Projects to Commence Construction
                           
 
Homestead, FL
    397,608 (1)   $ 51.9       2007     To be announced
 
                           
Norwood, MA
    95,242     $ 25.6       2007     To be announced
 
                           
Seabrook, NH
    398,805 (1)   $ 41.4       2007     To be announced
 
                           
McKinney, TX (Phase II)
    87,757     $ 7.3       2007     To be announced
 
                           
 
Wholly Owned Development Totals
    7,150,144     $ 668.5              
 
   
(1)
  Includes square footage not owned by the company.
   
(2)
  The asset is being developed with First Carolina Properties who has a 20% minority interest.
   
(3)
  The asset is being developed with David Berndt Interest who has a 50% interest.
   
     
Wholly Owned Developments 3.2


 

Developers Diversified Realty
Quarterly Financial Supplement
For the twelve months ended December 31, 2005
Wholly Owned and Consolidated Development
Assets Placed in Service as of December 31, 2005
         
    Assets Placed  
    in Service  
Date   (Millions)  
 
As of December 31, 2004
  $ 40.6  
1st Quarter 2005
  $ 4.1  
2nd Quarter 2005
  $ 24.0  
3rd Quarter 2005
  $ 6.6  
4th Quarter 2005
  $ 25.8  
Projected 2006
  $ 108.4  
Thereafter
  $ 459.0  
 
Total
  $ 668.5  
 
Wholly Owned and Consolidated Development
Funding Schedule as of December 31, 2005
         
Funded as of December 31, 2005
  $ 343.4  
Projected Net Funding During 2006
  $ 181.4  
Projected Net Funding Thereafter
  $ 143.7  
 
Total
  $ 668.5  
 
Wholly Owned Development Delivery and Funding Schedules 3.2

 


 

Developers Diversified Realty Corporation
Quarterly Financial Supplement
For the twelve months ended December 31, 2005
Summary of Consolidated Debt
as of December 31, 2005
                                 
            Mortgage     Maturity     Interest  
            Balance(000's)     Date     Rate (1)  
SENIOR DEBT:
                               
Unsecured Credit Facilities:
                               
$200 Million Term Loan
          $ 200,000       05/07       5.080  
$1 Billion Revolving Credit Facility
            150,000       05/08       4.642  
$60 Million Revolving Credit Facility
            0       05/08     NA
Secured Credit Facilities:
                               
San Antonio, TX
            0       07/06     NA
$400 Million Term Loan
            220,000       06/08       5.070  
 
                             
Total Term and Credit Facility Debt
            570,000                  
 
                               
PUBLIC DEBT:
                               
Medium Term Notes
    F       98,482 (2)     03/07       7.000  
Medium Term Notes
    F       10,000       07/07       7.020  
Unsecured Notes
    F       85,000       08/07       6.950  
Medium Term Notes
    F       2,000       12/07       6.960  
Medium Term Notes
    F       99,947       01/08       6.625  
Medium Term Notes
    F       274,295       01/09       3.875  
Medium Term Notes
    F       199,664       05/10       5.000  
Medium Term Notes
    F       299,692       07/10       4.625  
Medium Term Notes
    F       249,195       04/11       5.250  
Medium Term Notes
    F       348,370       10/12       5.375  
Medium Term Notes
    F       199,332       05/15       5.500  
Medium Term Notes
    F       100,000       07/18       7.500  
 
                             
Total Public Debt
            1,965,975                  
 
                               
MORTGAGE DEBT:
                               
Stone Oak, TX
    V       5,000       07/06       6.390  
Bayonet Point, FL
    F       5,327       08/06       9.750  
Silver Springs, MD (Tech 29-2)
    F       3,376       09/06       9.050  
Dublin, OH
    F       9,185       09/06       8.375  
Pickerington, OH
    F       4,079       12/06       8.250  
Sault St. Marie, MI
    F       1,497       05/07       8.375  
Hamilton, NJ
    V       65,000       05/07       5.190  
St. Louis, MO (Olympic)
    F       3,193       08/07       9.150  
Berlin, VT
    F       4,940       08/07       9.750  
Mt. Laurel, NJ
    V       46,354       09/07       5.290  
Apex, NC
    V       15,573       10/07       5.390  
DDR MDT MV, LLC
    V       45,923 (3)     10/07       5.110  
Tupelo, MS
    F       11,466       03/08       4.410  
Jacksonville, FL
    F       6,579       03/08       4.410  
Solon, OH
    F       15,883       03/08       4.410  
N. Charleston, SC
    F       11,372       03/08       4.410  
Walker, MI
    F       8,364       03/08       4.410  
Mt. Pleasant, SC (GS II)
    F       7,706       03/08       4.410  
Meridian, ID (GS II)
    F       24,905       03/08       4.410  
Summary of Consolidated Debt 3.3

 


 

Developers Diversified Realty Corporation
Quarterly Financial Supplement
For the twelve months ended December 31, 2005
Summary of Consolidated Debt
as of December 31, 2005 (con’t)
                                 
            Mortgage     Maturity     Interest  
            Balance(000's)     Date     Rate (1)  
Birmingham, AL (GS II)
    F     $ 26,972       03/08       4.410  
Wilmington, NC (GS II)
    F       20,676       03/08       4.410  
Durham, NC (GS II)
    F       7,049       03/08       4.410  
Silver Springs, MD (Tech 29-1)
    F       6,722       02/09       7.330  
Leawood, KS
    F       50,318       07/09       7.310  
Martinsville, VA
    F       19,656       12/09       8.460  
St. Louis, MO (Keller)
    F       1,353       01/10       8.625  
DDR MDT MV, LLC
    F       212,550 (3)     10/10       5.211  
Big Flats, NY (Big Flats I)
    F       10,176       12/10       8.011  
Plattsburgh, NY
    F       9,936       12/10       8.000  
Erie, PA
    F       25,322       04/11       6.884  
Erie, PA
    F       2,923       04/11       6.884  
Boardman, OH
    F       26,297       04/11       6.884  
St. Louis, MO (Sunset)
    F       34,090       04/11       6.884  
St. Louis, MO (Brentwood)
    F       25,322       04/11       6.884  
Denver, CO (Centennial)
    F       37,984       04/11       6.884  
Gates, NY (Westgate)
    F       24,757       10/11       7.240  
Indian Train, NC (Union TC Ph I)
    F       6,919       10/11       7.000  
Ashtabula, OH
    F       6,888       12/11       7.000  
West Pasco, FL
    F       4,784       02/12       9.625  
Denver, CO (Univ Hills)
    F       28,361       06/12       7.300  
St. Louis, MO (Gravois)
    F       1,582       07/12       8.625  
N. Charleston, SC
    F       10,651       07/12       7.370  
Mooresville, NC
    F       23,770       12/12       6.930  
Big Flats, NY (Big Flats IV)
    F       1,027       01/13       7.600  
Big Flats, NY (Big Flats II & III)
    F       4,406       01/13       8.010  
Buffalo, NY (Delaware Commons)
    F       1,125       01/13       6.960  
Jamestown, NY (Southside Plaza)
    F       1,619       04/13       7.590  
Victor, NY (Victor Square)
    F       6,599       04/13       5.800  
Mays Landing, NJ (Wrangleboro)
    F       50,221       05/13       6.990  
Beachwood, OH
    F       3,544       07/13       7.640  
W. Long Branch, NJ (Monmouth)
    F       14,125       07/13       8.570  
Boynton Beach, FL (Meadows Square)
    F       4,410       07/13       6.720  
Englewood, FL (Rotonda)
    F       2,062       07/13       5.800  
Reno, NV
    V       3,544       02/15       8.450  
Olean, NY
    F       4,736       07/15       8.995  
Mays Landing, NJ (Hamilton)
    F       15,349       09/15       4.700  
Columbus, OH (Consumer II West)
    F       13,942       11/15       10.188  
Amherst, NY (Kmart/Blvd Cons. II)
    F       12,501       11/15       7.850  
Lockport, NY (Walmart/Tops)
    F       12,962       01/16       8.000  
Merriam, KS (TIF)
    F       7,975       02/16       6.900  
Rome, NY (Freedom)
    F       4,452       09/16       7.850  
Medina, NY
    F       3,873       11/16       7.660  
Bellefontaine, OH
    F       2,349       12/16       7.500  
Summary of Consolidated Debt 3.3

 


 

Developers Diversified Realty Corporation
Quarterly Financial Supplement
For the twelve months ended December 31, 2005
Summary of Consolidated Debt
as of December 31, 2005 (con’t)
                                 
            Mortgage     Maturity     Interest  
            Balance(000's)     Date     Rate (1)  
Amherst, NY (Tops Transit + French)
    F     $ 5,225       12/16       7.680  
Canandaigua, NY
    F       5,736       01/17       6.150  
Cheektowaga, NY (Walmart Thruway)
    F       4,973       10/17       6.780  
Ithaca, NY
    F       19,323       01/18       7.050  
Amherst, NY (Target/Blvd Cons. II)
    F       13,623       07/18       5.670  
Springville, NY
    F       6,182       07/18       6.375  
Niskayuna, NY (Mohawk)
    F       25,049       12/18       5.750  
Henderson, TN
    F       8,971       01/19       7.660  
Spring Hill, FL
    F       5,142       09/19       9.750  
Alden, NY
    F       4,416       10/19       8.100  
Cedar Rapids, IA
    F       9,752       01/20       9.375  
Riverdale, UT (North)
    F       8,719       10/20       9.300  
Plainville, CT
    F       7,100       04/21       7.125  
Allentown, PA
    F       18,044       06/21       6.950  
Princeton, NJ
    F       25,699       03/27       8.262  
Bayamon, PR (Rio Hondo)
    F       56,743       05/28       7.180  
San Juan, PR (Senorial Plaza)
    F       14,735       05/28       7.180  
Bayamon, PR (Rexville Plaza)
    F       8,877       05/28       7.180  
Arecibo, PR (Atlantico)
    F       14,826       05/28       7.180  
 
                             
Total Mortgage Debt
            1,354,733                  
 
                             
Total Debt
          $ 3,890,709                  
 
                               
Adjustment for Reverse Swap
            292 (4)                
 
                             
 
          $ 3,891,001                  
 
                             
Weighted Average — Total
                  5.36
years
    5.7 %
 
                             
Weighted Average — Fixed
          $ 3,079,315     6.27
years
    5.8 %
 
                             
Weighted Average — Floating
          $ 811,393     1.89
years
    5.1 %
 
                             
Notes:
     
F — Fixed Rate Debt
  V — Variable Rate Debt
1.   Interest rate figures reflect coupon rates of interest and do not include discounts or premiums. Annualized 2005 deferred finance cost amortization of approximately $7.4 million, net is offset by approximately $12.5 million of annualized fair market value adjustment in 2005.
2.   Public debt of $60 million has been converted to a variable rate of 6.345%. The remaining balance of $38.5 million is at the stated fixed rate.
3.   The company’s 50% joint venture with DDR Macquarie is consolidated within DDR’s accounts pursuant to FIN 46.
4.   Offset included in other assets.
Summary of Consolidated Debt 3.3

 


 

     
Developers Diversified Realty Corporation
Quarterly Financial Supplement
For the twelve months ended December 31, 2005
Summary of Consolidated Mortgage Principal Payments
and Corporate Debt Maturities
as of December 31, 2005
(000’s)
                                                                                                 
    2006 Payments   2007 Payments   2008 Payments   2009 Payments   2010 Payments   2011 Payments   2012 Payments   2013 Payments   2014 Payments   2015 Payments   Thereafter   Total
PROPERTY MORTGAGES
                                                                                               
Plainville, CT (TIF)
                                                                                    7,100       7,100  
Bayonet Point, FL
    5,327                                                                                       5,327  
Tupelo, MS
    300       313       10,852                                                                       11,466  
Jacksonville, FL
    172       180       6,227                                                                       6,579  
Reno, NV
    59       64       67       73       78       84       89       96       103       2,831               3,544  
Denver, CO (Univ Hills)
    562       604       650       699       752       809       24,286                                       28,361  
Henderson, TN
    395       426       460       497       536       578       624       674       727       785       3,270       8,971  
Allentown, PA
    666       714       765       820       879       942       1,009       1,082       1,159       1,242       8,767       18,044  
Erie, PA
    293       314       331       360       386       23,638                                               25,322  
Erie, PA
    33       36       38       41       44       2,731                                               2,923  
Martinsville, VA
    221       241       258       18,936                                                               19,656  
Boardman, OH
    303       325       343       373       400       24,553                                               26,297  
Solon, OH
    415       434       15,033                                                                       15,883  
St. Louis, MO (Sunset)
    392       421       444       483       518       31,832                                               34,090  
St. Louis, MO (Brentwood)
    293       314       331       360       386       23,638                                               25,322  
Denver, CO (Centennial)
    438       469       496       539       578       35,464                                               37,984  
Cedar Rapids, IA
    346       380       417       458       503       552       606       665       730       802       4,292       9,752  
St. Louis, MO (Olympic)
    367       2,826                                                                               3,193  
St. Louis, MO (Gravois)
    355       389       292       115       125       136       170                                       1,582  
St. Louis, MO (Keller)
    289       315       343       374       33                                                       1,353  
N. Charleston, SC
    297       311       10,763                                                                       11,372  
Sault St Marie, MI
    1,079       418                                                                               1,497  
Walker, MI
    219       229       7,917                                                                       8,364  
Mt. Pleasant, SC
    201       211       7,294                                                                       7,706  
Meridian, ID
    651       681       23,573                                                                       24,905  
Riverdale, UT (North)
    287       315       345       379       415       456       500       548       602       660       4,213       8,719  
Birmingham, AL
    705       737       25,530                                                                       26,972  
Wilmington, NC
    541       565       19,570                                                                       20,676  
Berlin, VT
            4,940                                                                               4,940  
Spring Hill, FL
    187       206       227       251       276       304       335       370       407       449       2,129       5,142  
West Pasco, FL
                                                    4,784                                       4,784  
Princeton, NJ
    389       423       454       499       543       590       636       697       758       823       19,887       25,699  
Beachwood, OH
    359       387       420       451       487       525       567       349                               3,544  
Leawood, KS
    1,201       1,292       1,390       46,435                                                               50,318  
Durham, NC
    184       193       6,672                                                                       7,049  
Bellefontaine, OH
    143       154       166       179       193       208       224       241       260       280       302       2,349  
Dublin, OH
    9,185                                                                                       9,185  
Pickerington, OH
    4,079                                                                                       4,079  
Silver Springs, MD (Tech 29-1)
    170       183       196       6,173                                                               6,722  
Silver Springs, MD (Tech 29-2)
    3,376                                                                                       3,376  
Summary of Consolidated Mortgage Principal Payments Corporate Debt Maturities 3.4

 


 

     
Developers Diversified Realty Corporation
Quarterly Financial Supplement
For the twelve months ended December 31, 2005
Summary of Consolidated Mortgage Principal Payments
and Corporate Debt Maturities
as of Decemeber 31, 2005 (con’t)
(000’s)
                                                                                                 
    2006 Payments   2007 Payments   2008 Payments   2009 Payments   2010 Payments   2011 Payments   2012 Payments   2013 Payments   2014 Payments   2015 Payments   Thereafter   Total
Jamestown, NY (Southside Plaza)
    165       178       193       208       225       242       262       147                               1,619  
Ithaca, NY
    1,052       1,128       1,210       1,298       1,393       1,494       1,603       1,720       1,845       1,980       4,599       19,323  
Columbus, OH (Consumer II West)
    420       465       514       568       628       694       767       848       937       8,103               13,942  
Olean, NY
    326       357       390       427       467       511       559       611       669       418               4,736  
N. Charleston, SC
    206       222       239       257       277       298       9,152                                       10,651  
W. Long Branch, NJ (Monmouth)
    1,382       1,506       1,640       1,786       1,945       2,119       2,307       1,440                               14,125  
Big Flats, NY (Big Flats I)
    1,724       1,867       2,022       2,190       2,374                                                       10,176  
Mays Landing, NJ (Wrangleboro)
    2,094       2,245       2,407       2,581       2,767       2,967       3,181       31,980                               50,221  
Plattsburgh, NY
    1,683       1,823       1,974       2,138       2,318                                                       9,936  
Amherst, NY (Kmart/Blvd Cons. II)
    868       938       1,015       1,097       1,187       1,283       1,388       1,500       1,623       1,603               12,501  
Big Flats, NY (Big Flats IV)
    63       68       73       79       86       92       100       466                               1,027  
Lockport, NY (Walmart/Tops)
    872       944       1,022       1,107       1,199       1,298       1,406       1,523       1,649       1,786       155       12,962  
Big Flats, NY (Big Flats II)
    462       501       543       589       639       693       751       227                               4,406  
Amherst, NY (Tops Transit + French)
    315       340       367       396       427       461       498       538       580       627       677       5,225  
Amherst, NY (Target/Blvd Cons. II)
    764       808       856       905       958       1,014       1,073       1,135       1,201       1,271       3,637       13,623  
Medina, NY
    236       255       275       297       320       346       373       403       435       469       463       3,873  
Mays Landing, NJ (Hamilton)
    1,271       1,332       1,396       1,463       1,534       1,607       1,684       1,765       1,850       1,446               15,349  
Gates, NY (Westgate)
    301       324       349       375       404       23,003                                               24,757  
Boynton Beach, FL (Meadows Square)
    453       485       519       556       595       637       682       483                               4,410  
Rome, NY (Freedom)
    273       295       319       345       374       404       437       472       511       552       469       4,452  
Englewood, FL (Rotonda)
    223       236       250       265       281       298       315       193                               2,062  
Mooresville, NC
    279       300       322       345       370       397       426       21,332                               23,770  
Alden, NY
    160       173       188       208       246       266       289       313       343       393       1,836       4,416  
Indian Train, NC (Union TC Ph I)
    88       95       102       109       117       6,407                                               6,919  
Cheektowaga, NY (Walmart Thruway)
    284       304       325       348       372       398       426       456       487       521       1,053       4,973  
Ashtabula, OH
    87       93       100       107       115       6,385                                               6,888  
Buffalo, NY (Delaware Commons)
    127       137       146       157       168       180       193       17                               1,125  
Springville, NY
    331       353       376       401       427       455       485       517       551       587       1,700       6,182  
Niskayuna, NY (Mohawk)
    1,335       1,414       1,497       1,585       1,679       1,778       1,883       1,994       2,112       2,237       7,535       25,049  
Canandaigua, NY
    373       396       421       448       476       507       539       573       609       647       748       5,736  
Victor, NY (Victor Square)
    95       100       107       113       120       127       135       5,802                               6,599  
Bayamon, PR (Rio Hondo)
    941       1,011       1,076       1,169       1,256       1,351       1,442       1,561       1,679       1,805       43,451       56,743  
San Juan, PR (Senorial Plaza)
    244       263       279       303       326       351       375       405       436       469       11,283       14,735  
Bayamon, PR (Rexville Plaza)
    147       158       168       183       197       211       226       244       263       282       6,798       8,877  
Arecibo, PR (Atlantico)
    246       264       281       305       328       353       377       408       439       472       11,353       14,826  
Merriam, KS (TIF)
                                                                                    7,975       7,975  
DDR MDT MV, LLC
            45,923                       212,550                                                       258,473  
Hamilton, NJ
            65,000                                                                               65,000  
 
                                                                                               
Total — Property Mortgages
    54,371       152,309       164,825       103,202       246,274       205,669       67,162       83,796       22,966       33,541       153,691       1,287,807  
Summary of Consolidated Mortgage Principal Payments Corporate Debt Maturities 3.4

 


 

     
Developers Diversified Realty Corporation
Quarterly Financial Supplement
For the twelve months ended December 31, 2005
Summary of Consolidated Mortgage Principal Payments
and Corporate Debt Maturities
as of Decemeber 31, 2005 (con’t)
(000’s)
                                                                                                 
    2006 Payments   2007 Payments   2008 Payments   2009 Payments   2010 Payments   2011 Payments   2012 Payments   2013 Payments   2014 Payments   2015 Payments   Thereafter   Total
CONSTRUCTION LOANS
                                                                                               
$5 Million Construction Loan
    5,000                                                                                       5,000  
(Compass Bank)
                                                                                               
$20 Million Construction Loan
            15,573                                                                               15,573  
(National City Bank)
                                                                                               
$48 Million Construction Loan
            46,354                                                                               46,354  
(Wachovia Bank)
                                                                                               
 
                                                                                               
Total — Construction Loans
    5,000       61,926       0       0       0       0       0       0       0       0       0       66,926  
 
                                                                                               
DEBT OFFERINGS
                                                                                               
Senior Notes
            110,482       99,947       274,295       499,355       249,195       348,370                       199,332       100,000       1,880,976  
Unsecured Notes
            85,000                                                                               85,000  
 
                                                                                               
Total — Debt Offerings
    0       195,482       99,947       274,295       499,355       249,195       348,370       0       0       199,332       100,000       1,965,975  
 
                                                                                               
Total — Property Mortgages,
    59,371       409,717       264,772       377,497       745,629       454,863       415,532       83,796       22,966       232,873       253,691       3,320,709  
Construction Loans & Debt Offerings
                                                                                               
 
                                                                                               
REVOLVING CREDIT FACILITIES & TERM LOANS
                                                                                               
$1 Billion Unsecured Credit
                    150,000 (1)                                                                     150,000  
(JPMorgan Chase)
                                                                                               
$400 Million Secured Term
                    220,000 (1)                                                                     220,000  
(Key Bank)
                                                                                               
$200 Million Unsecured Term
            200,000 (1)                                                                             200,000  
(JPMorgan Chase)
                                                                                               
$60 Million Unsecured Credit
                    0 (1)                                                                     0  
(National City Bank)
                                                                                               
$25 Million Secured Credit
    0                                                                                       0  
(San Antonio, TX)
                                                                                               
 
                                                                                               
Total — Debt
  $ 59,371     $ 609,717     $ 634,772     $ 377,497     $ 745,629     $ 454,863     $ 415,532     $ 83,796     $ 22,966     $ 232,873     $ 253,691     $ 3,890,709  
 
                                                                                               
Notes:
(1)
  Balance at December 31, 2005 on revolving credit facilities. The $1 billion JPMorgan Chase facility has one one-year extension option to 2009. The $400 million Key Bank facility has two one-year extension options to 2010. The $200 million JPMorgan facility has one one-year extension option to 2008. The $60 million National City Bank facility has one one-year extension option to 2009.
Summary of Consolidated Mortgage Principal Payments Corporate Debt Maturities 3.4

 


 


Developers Diversified Realty
Quarterly Financial Supplement
For the twelve months ended December 31, 2005
Joint Ventures (Combining Financial Information) (1)
(in millions)
Combining Balance Sheets
as of December 31, 2005
                                                                         
            RVIP III B                     RVIP VIII             Community Centers     Community Centers     Community Centers  
    RVIP III (3)     Deer Park, IL     RVIP VI     RVIP VII     Tech Ridge LLC     DPG     (5)     Five     Seven (6)  
Real Estate Assets
  $ 0.8     $ 83.7     $ 32.4     $ 123.3     $ 33.9     $ 129.3     $ 0.0     $ 265.8     $ 0.0  
Accumulated Depreciation
    0.0       (9.5 )     (4.7 )     (14.1 )     (1.8 )     (3.7 )     0.0       (40.4 )     0.0  
 
                                                     
Real Estate, net
    0.8       74.2       27.7       109.2       32.1       125.6       0.0       225.4       0.0  
 
                                                     
Receivables, Net
    0.5       0.0       0.4       2.5       1.0       1.5       0.0       6.7       0.0  
Other assets
    0.7       3.1       1.3       7.5       0.4       1.8       0.8       5.7       0.0  
Disproportionate Share of Equity
                                                     
 
                                                     
 
  $ 2.0     $ 77.3     $ 29.4     $ 119.2     $ 33.5     $ 128.9     $ 0.8     $ 237.8     $ 0.0  
 
                                                     
 
                                                                       
Mortgage Debt
  $ 0.0     $ 56.5     $ 18.1     $ 74.1     $ 23.3     $ 11.3     $ 0.0     $ 298.0     $ 0.0  
Amounts payable to DDRC
    0.0       0.0       0.0       0.0       0.0       0.0       0.0       0.0       0.0  
Other liabilities
    0.5       3.4       0.7       16.3       0.6       2.9       0.6       3.0       0.0  
 
                                                     
 
    0.5       59.9       18.8       90.4       23.9       14.2       0.6       301.0       0.0  
Accumulated equity (deficit)
    1.5       17.4       10.6       28.8       9.6       114.7       0.2       (63.2 )     0.0  
Disproportionate Share of Equity
                                                     
 
                                                     
 
  $ 2.0     $ 77.3     $ 29.4     $ 119.2     $ 33.5     $ 128.9     $ 0.8     $ 237.8     $ 0.0  
 
                                                     
 
                                                                       
Proportionate share of other assets/liabilities, net
  $ 0.2     ($ 0.1 )   $ 0.3     ($ 1.3 )   $ 0.2     $ 0.0     $ 0.2     $ 4.8     $ 0.0  
 
                                                     
Disproportionate amount payable to DDR
  $ 0.0     $ 0.0     $ 0.0     $ 0.0     $ 0.0     $ 0.0     $ 0.0     $ 0.0     $ 0.0  
 
                                                     
Combining Statements of Operations for the period ended December 31, 2005
                                                                         
            RVIP III B                     RVIP VIII             Community Centers     Community Centers     Community Centers  
    RVIP III (3)     Deer Park, IL     RVIP VI     RVIP VII     Tech Ridge LLC     DPG     (5)     Five     Seven (6)  
Revenues from operations
  $ 0.0     $ 12.5     $ 4.1     $ 13.9     $ 5.7     $ 13.2     $ 0.0     $ 35.4     $ 0.9  
Rental operation expenses
    0.0       (4.3 )     (2.3 )     (4.9 )     (2.1 )     (3.3 )     0.0       (10.9 )     (0.3 )
 
                                                     
Net operating income
    0.0       8.2       1.8       9.0       3.6       9.9       0.0       24.5       0.6  
Depreciation and amortization expense
    0.0       (2.5 )     (0.9 )     (2.8 )     (1.1 )     (3.2 )     0.0       (6.1 )     (0.1 )
Interest expense
    0.0       (2.8 )     (1.5 )     (4.6 )     (1.3 )     (0.7 )     0.0       (13.6 )     (0.3 )
 
                                                     
Income (loss) before gain on sale
    0.0       2.9       (0.6 )     1.6       1.2       6.0       0.0       4.8       0.2  
Gain (loss) on sale of real estate
    0.0       0.0       0.0       0.0       0.0       0.0       0.9       0.0       0.0  
Discontinued operations
    (0.1 )     0.0       0.0       (0.1 )     0.0       0.0       0.0       0.0       0.0  
Gain on sale of discontinued operations
    20.3       0.0       0.0       21.1       0.0       0.0       0.0       0.0       0.0  
Disproportionate Share of Income
                                                     
 
                                                     
Net income (loss)
  $ 20.2     $ 2.9     ($ 0.6 )   $ 22.6     $ 1.2     $ 6.0     $ 0.9     $ 4.8     $ 0.2  
DDR Ownership interest
    ***     ***     ***     ***     ***     10 %     ***     50 %     50 %
 
                                                     
 
  $ 7.9     $ 1.1     ($ 0.2 )   $ 8.2     $ 0.3     $ 0.6     $ 0.9     $ 2.4     $ 0.1  
Amortization of basis differential
    (2.6 )     0.0       0.0       (0.1 )     0.0       0.0       (0.4 )     0.2       0.0  
 
                                                     
 
  $ 5.3     $ 1.1     ($ 0.2 )   $ 8.1     $ 0.3     $ 0.6     $ 0.5     $ 2.6     $ 0.1  
 
                                                     
 
                                                                       
Proportionate share of net operating income (8)
  $ 0.0     $ 2.1     $ 0.5     $ 1.9     $ 0.9     $ 1.0     $ 0.0     $ 12.2     $ 0.3  
 
                                                     
Proportionate share of interest expense (8)
  $ 0.0     $ 0.7     $ 0.4     $ 1.0     $ 0.3     $ 0.1     $ 0.0     $ 6.8     $ 0.1  
 
                                                     
 
Funds From Operations (“FFO”):
 
Net income (loss)
  $ 20.2     $ 2.9     ($ 0.6 )   $ 22.6     $ 1.2     $ 6.0     $ 0.9     $ 4.8     $ 0.2  
Depreciation of real property
    0.8       2.4       0.9       4.0       1.1       3.2       0.0       6.1       0.2  
(Gain) loss on sale
    (2.6 )     0.0       0.0       (15.6 )     0.0       0.0       (0.9 )     0.0       0.0  
Disproportionate Share of Income
                                                     
 
                                                     
 
  $ 18.4     $ 5.3     $ 0.3     $ 11.0     $ 2.3     $ 9.2     $ 0.0     $ 10.9     $ 0.4  
DDR ownership interest
    ***     ***     ***     ***     ***     10 %     ***     50 %     50 %
 
                                                     
DDR FFO
  $ 3.9     $ 2.0     $ 0.1     $ 3.4     $ 0.8     $ 0.9     $ 0.2     $ 5.5     $ 0.2  
 
                                                     

Joint Venture Financials 4.1


 

Developers Diversified Realty
Quarterly Financial Supplement
For the twelve months ended December 31, 2005
Joint Ventures (Combining Financial Information) (1)
(in millions)
Combining Balance Sheets
as of December 31, 2005
                                                                         
    Community             Lennox Town     Sun Center     Dublin Village     Dublin Village                    
    Centers Eight     Kildeer, IL     Center(2)     Limited(2)     (7)     (2)(3)     DOTRS     Littleton, CO (3)     Salisbury, MD  
Real Estate Assets
  $ 26.7     $ 31.0     $ 21.0     $ 25.9     $ 0.0     $ 0.1     $ 25.5     $ 3.1     $ 2.1  
Accumulated Depreciation
    (2.8 )     (2.2 )     (3.9 )     (6.4 )     0.0       0.0       (4.5 )     0.0       (0.3 )
 
                                                     
Real Estate, net
    23.9       28.8       17.1       19.5       0.0       0.1       21.0       3.1       1.8  
 
                                                     
Receivables, Net
    0.7       0.4       1.7       0.9       0.0       0.0       0.9       0.0       0.1  
Other assets
    0.8       0.4       0.6       0.8       0.0       0.0       0.4       0.1       0.1  
Disproportionate Share of Equity
                                                     
 
                                                     
 
  $ 25.5     $ 29.6     $ 19.4     $ 21.2     $ 0.0     $ 0.1     $ 22.3     $ 3.2     $ 2.0  
 
                                                     
 
Mortgage Debt
  $ 17.4     $ 19.5     $ 18.1     $ 20.6     $ 0.0     $ 0.0     $ 10.3     $ 0.0     $ 1.8  
Amounts payable to DDRC
    0.0       0.0       0.0       0.0       0.0       0.0       0.0       0.0       0.0  
Other liabilities
    0.8       0.6       1.0       0.8       0.0       0.0       0.5       0.1       0.0  
 
                                                     
 
    18.2       20.1       19.1       21.4       0.0       0.0       10.8       0.1       1.8  
Accumulated equity (deficit)
    7.3       9.5       0.3       (0.2 )     0.0       0.1       11.5       3.1       0.2  
Disproportionate Share of Equity
                                                     
 
                                                     
 
  $ 25.5     $ 29.6     $ 19.4     $ 21.2     $ 0.0     $ 0.1     $ 22.3     $ 3.2     $ 2.0  
 
                                                     
Proportionate share of other assets/liabilities, net
  $ 0.4     $ 0.0     $ 0.6     $ 0.8     ($ 0.0 )   ($ 0.0 )   $ 0.4     ($ 0.0 )   $ 0.1  
 
                                                     
Disproportionate amount payable to DDR
  $ 0.0     $ 0.0     $ 0.0     $ 0.0     $ 0.0     $ 0.0     $ 0.0     $ 0.0     $ 0.0  
 
                                                     
Combining Statements of Operations
for the period ended December 31, 2005
                                                                         
    Community             Lennox Town     Sun Center     Dublin Village     Dublin Village                    
    Centers Eight     Kildeer, IL     Center(2)     Limited(2)     (7)     (2)(3)     DOTRS     Littleton, CO (3)     Salisbury, MD  
Revenues from operations
  $ 4.4     $ 4.0     $ 4.7     $ 4.3     $ 1.7     $ 0.0     $ 3.9     $ 0.0     $ 0.3  
Rental operation expenses
    (1.5 )     (1.0 )     (1.4 )     (1.3 )     (0.7 )     0.0       (1.1 )     (0.1 )     (0.1 )
 
                                                     
Net operating income
    2.9       3.0       3.3       3.0       1.0       0.0       2.8       (0.1 )     0.2  
Depreciation and amortization expense
    (0.5 )     (0.6 )     (0.4 )     (0.8 )     (3.9 )     0.0       (0.6 )     0.0       (0.1 )
Interest expense
    (1.4 )     (1.1 )     (1.5 )     (1.6 )     0.0       (0.0 )     (0.5 )     0.0       (0.1 )
 
                                                     
Income (loss) before gain on sale
    1.0       1.3       1.4       0.6       (2.9 )     0.0       1.7       (0.1 )     0.0  
Gain (loss) on sale of real estate
    0.0       0.0       0.0       0.0       0.0       0.0       0.0       0.0       0.0  
Discontinued operations
    0.0       0.0       0.0       0.0       0.0       0.0       0.0       0.0       0.0  
Gain on sale of discontinued operations
    0.0       0.0       0.0       0.0       0.0       0.0       0.0       0.0       0.0  
Disproportionate Share of Income
                                                     
 
                                                     
Net income (loss)
  $ 1.0     $ 1.3     $ 1.4     $ 0.6     ($ 2.9 )   $ 0.0     $ 1.7     ($ 0.1 )   $ 0.0  
DDR Ownership interest
    50 %     10 %     ***     ***     80 %     63 %     50 %     50 %     50 %
 
                                                     
 
  $ 0.5     $ 0.1     $ 0.7     $ 0.4     ($ 2.3 )   $ 0.0     $ 0.9     ($ 0.0 )   $ 0.0  
Amortization of basis differential
    0.0       0.0       (0.1 )     (0.2 )     0.5       0.0       0.1       0.0       0.0  
 
                                                     
 
  $ 0.5     $ 0.1     $ 0.6     $ 0.2     ($ 1.8 )   $ 0.0     $ 1.0     $ 0.0     $ 0.0  
 
                                                     
Proportionate share of net operating income (8)
  $ 1.5     $ 0.3     $ 1.7     $ 2.4     $ 0.8     $ 0.0     $ 1.4     ($ 0.0 )   $ 0.1  
 
                                                     
Proportionate share of interest expense (8)
  $ 0.7     $ 0.1     $ 0.7     $ 1.3     $ 0.0     $ 0.0     $ 0.2     $ 0.0     $ 0.1  
 
                                                     
 
                                                                       
Funds From Operations (“FFO”):
                                                     
 
                                                                       
Net income (loss)
  $ 1.0     $ 1.3     $ 1.4     $ 0.6     ($ 2.9 )   $ 0.0     $ 1.7     ($ 0.1 )   $ 0.0  
Depreciation of real property
    0.5       0.7       0.5       0.8       3.9       0.0       0.6       0.0       0.1  
(Gain) loss on sale
    0.0       0.0       0.0       0.0       0.0       0.0       0.0       0.0       0.0  
Disproportionate Share of Income
                                                     
 
                                                     
 
  $ 1.5     $ 2.0     $ 1.9     $ 1.4     $ 1.0     $ 0.0     $ 2.3     ($ 0.1 )   $ 0.1  
DDR ownership interest
    50 %     10 %     ***     ***     80 %     63 %     50 %     50 %     50 %
 
                                                     
DDR FFO
  $ 0.8     $ 0.2     $ 0.9     $ 1.1     $ 0.8     $ 0.0     $ 1.2     ($ 0.0 )   $ 0.0  
 
                                                     

Joint Venture Financials 4.1


 


Developers Diversified Realty
Quarterly Financial Supplement
For the twelve months ended December 31, 2005
Joint Ventures (Combining Financial Information) (1)
(in millions)
Combining Balance Sheets
as of December 31, 2005
                                                                         
                            Service
Merchandise
                    Sansone Group /              
    Coon Rapids, MN (5)     Phoenix, AZ (2)     Pasadena, CA     (4)     Jefferson County, MO     Apex IV (3)     DDRC LLC     DDR Markaz     DDR Markaz II  
Real Estate Assets
  $ 0.0     $ 27.5     $ 114.5     $ 130.6     $ 6.6     $ 12.0     $ 0.4     $ 167.3     $ 202.4  
Accumulated Depreciation
    0.0       (5.0 )     (9.7 )     (8.4 )     (0.5 )     0.0       (0.3 )     (10.4 )     (6.2 )
 
                                                     
Real Estate, net
    0.0       22.5       104.8       122.2       6.1       12.0       0.1       156.9       196.2  
 
                                                     
Receivables, Net
    0.0       1.3       2.8       16.1       0.1       0.0       1.4       2.1       2.2  
Other assets
    0.7       0.6       4.4       39.8       0.3       0.1       2.8       6.0       6.0  
Disproportionate Share of Equity
                                                     
 
                                                     
 
  $ 0.7     $ 24.4     $ 112.0     $ 178.1     $ 6.5     $ 12.1     $ 4.3     $ 165.0     $ 204.4  
 
                                                     
 
                                                                       
Mortgage Debt
  $ 0.0     $ 17.1     $ 85.0     $ 29.0