DDR
DEVELOPERS DIVERSIFIED REALTY CORP (Form: 8-K, Received: 04/28/2006 06:08:30)
Table of Contents

 
 
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) April 27, 2006
DEVELOPERS DIVERSIFIED REALTY CORPORATION
(Exact name of registrant as specified in its charter)
         
Ohio
  1-11690   34-1723097
 
(State or other jurisdiction
  (Commission   (IRS Employer
of incorporation)
  File Number)   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))
 
 

 


TABLE OF CONTENTS

Item 2.02 Results of Operations and Financial Condition
SIGNATURES
EX-99.1 News Release
EX-99.2 Quarterly Financial Supplement


Table of Contents

Item 2.02 Results of Operations and Financial Condition
On April 27, 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 three months ended March 31, 2006. 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.

 


Table of Contents

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
  April 27, 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 and   Vice President of Investor Relations
 
  Chief Executive Officer   216-755-5455
 
  216-755-5500    
DEVELOPERS DIVERSIFIED REALTY REPORTS DILUTED FFO
PER SHARE OF $0.78 FOR THE QUARTER ENDED MARCH 31, 2006
      CLEVELAND, OHIO, April 27, 2006 — Developers Diversified Realty Corporation (NYSE: DDR), the nation’s leading owner, manager and developer of market-dominant community centers, today reported operating results for the first quarter ended March 31, 2006.
    Funds From Operations (“FFO”) per diluted share was $0.78 and net income per diluted share was $0.33
 
    Core portfolio leased percentage increased 40 basis points over the prior year to 95.9%
 
    Executed leases during the first quarter totaled approximately 1.4 million square feet, including 96 new leases and 177 renewals
 
    Base rents increased 28.4% on new leases, 11.3% on renewals and 16.2% on a blended basis
 
    Same store net operating income (“NOI”) increased 2.3% over the prior period
     Scott Wolstein, Developers Diversified’s Chairman and Chief Executive Officer stated, “I’m pleased to report this quarter’s financial results. We continue to see intense tenant demand for space, which is reflected in our operating portfolio metrics and in leasing activity at our development projects. In addition, our proactive balance sheet management continues to reduce financial risk and improve our liquidity and flexibility.”
      Financial Results:
     FFO, a widely accepted measure of REIT performance, on a diluted and basic per share basis was $0.78 as compared to $0.90 for the same period in the previous year, a decrease of 13.3%. FFO available to common shareholders was $86.2 million for the quarter ended March 31, 2006, as compared to $99.1 million for the first quarter of 2005, a decrease of 13.0%. Net income available to common shareholders for the three months ended March 31, 2006 was $35.9 million or $0.33 per share (diluted and basic) compared to first quarter 2005 net income of $91.8 million, or $0.84 per share (diluted) and $0.85 per share (basic). The decrease in net income and FFO for the quarter ended March 31, 2006 is primarily related to a decrease in gain on sale of real estate assets as compared to 2005.
     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, (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 first quarter of 2006, the Company executed 96 new leases aggregating 685,421 square feet and 177 renewals aggregating 676,720 square feet. Rental rates on new leases increased by 28.4% and rental rates on renewals increased by 11.3%. On a blended basis, rental rates for new leases and renewals increased by 16.2%. At March 31, 2006, the average annualized base rent per occupied square foot, including those properties owned through joint ventures, was $11.50, as compared to $11.27 at March 31, 2005.
     At March 31, 2006, the portfolio, including those properties owned through joint ventures, was 96.1% leased. Excluding the impact of the properties acquired from Mervyns, the portfolio was 95.9% leased, as compared to 95.5% at March 31, 2005. 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 March 31, 2006, the portfolio was 95.2% occupied. Excluding the impact of the properties acquired from Mervyns, the portfolio was 95.0% occupied, as compared to 94.9% at March 31, 2005.
Strategic Real Estate Transactions:
MDT Joint Venture
     In March 2006, the Company sold newly developed expansion areas located in Birmingham, Alabama and Monaca, Pennsylvania, aggregating 0.6 million square feet to the MDT Joint Venture for approximately $14.6 million. The Company recognized an aggregate merchant build gain of $5.5 million, and deferred gains of approximately $1.0 million relating to the Company’s effective 14.5% ownership interest in the venture. These expansion areas are adjacent to shopping centers currently owned by the MDT Joint Venture.
Acquisitions
     In January 2006, the Company acquired its partner’s 75% ownership interest in a shopping center located in Pasadena, California for $55.9 million in addition to assuming the partner’s proportionate share of the $85 million of existing mortgage debt (or $63.75 million) which was repaid following the acquisition. The total shopping center was valued at approximately $175 million, and DDR earned a promoted interest of approximately $13 million which has not been included in earnings but as an adjustment to the Company’s cost basis in the asset.

 


 

     Following the date of acquisition, this previously unconsolidated joint venture is consolidated into the Company’s consolidated financial statements.
Expansions:
     During the three month period ended March 31, 2006, the Company completed two expansions and redevelopment projects located in Ocala, Florida and Rome, New York at an aggregate cost of $6.1 million. The Company is currently expanding/redeveloping eight shopping centers located in Gadsden, Alabama; Lakeland, Florida; Stockbridge, Georgia; Ottumwa, Iowa; Gaylord, Michigan; Olean, New York; Mooresville, North Carolina and Bayamon, Puerto Rico at a projected aggregate cost of approximately $40.5 million. The Company anticipates commencing construction on three additional expansion and redevelopment projects at shopping centers located in Birmingham, Alabama; Hamilton, New Jersey and Amherst, New York.
     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 $58.1 million. Two of the Company’s joint ventures anticipate commencing expansion/redevelopment projects at their shopping centers located in Deer Park, Illinois and Kirkland, Washington.
Development (Consolidated):
     As of March 31, 2006, the Company has substantially completed the construction of the Freehold, New Jersey shopping center, which has an aggregate cost of $25.4 million.
     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 $480.7 million and will create an additional 4.3 million square feet of gross leasable retail space. At March 31, 2006, approximately $204.2 million of costs were incurred in relation to these development projects.
     The Company anticipates commencing construction in 2006 on four additional shopping centers located in Homestead, Florida; Norwood, Massachusetts; Seabrook, New Hampshire and McKinney, Texas.
Development (Joint Ventures):
     Three of the Company’s joint ventures currently have shopping center projects under construction. These projects have an aggregate projected cost of approximately $117.2 million. These projects are located in Merriam, Kansas; 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 majority of the project located in San Antonio, Texas was substantially completed during 2005. The remaining projects are scheduled for completion during 2007. At March 31, 2006, approximately $57.7 million of costs were incurred in relation to these development projects.
Financing:
     In March 2006, the Company executed the accordion feature of the secured term loan agreement with KeyBank Capital Markets and Banc of America Securities LLC (Joint Arrangers), that provided for the increase of the secured term loan to $400 million from $220 million.

 


 

     Developers Diversified Realty Corporation currently owns and manages approximately 500 retail operating and development properties in 44 states, plus Puerto Rico, comprising approximately 114 million square feet of real estate. Developers Diversified Realty 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, 2005.

 


 

DEVELOPERS DIVERSIFIED REALTY CORPORATION
Financial Highlights
(In thousands — except per share data)
                 
    Three Month Period  
    Ended March 31  
Revenues:   2006     2005  
Minimum rents (A)
  $ 139,992     $ 123,105  
Percentage and overage rents (A)
    2,241       2,006  
Recoveries from tenants
    42,059       37,055  
Ancillary income
    2,995       1,777  
Other property related income
    2,297       1,056  
Management fee income
    5,694       4,292  
Development fees
    666       488  
Other (B)
    6,582       2,133  
 
           
 
    202,526       171,912  
 
           
Expenses:
               
Operating and maintenance
    25,914       23,507  
Real estate taxes
    23,124       20,587  
General and administrative (C)
    15,410       13,330  
Depreciation and amortization
    46,943       39,451  
 
           
 
    111,391       96,875  
 
           
Other income (expense):
               
Interest income
    3,121       1,009  
Interest expense
    (54,000 )     (40,650 )
Other expense (D)
    (500 )     (613 )
 
           
 
    (51,379 )     (40,254 )
 
           
Income before equity in net income of joint ventures, minority equity interests, income tax of taxable REIT subsidiaries and franchise taxes, discontinued operations and gain on sales of real estate
    39,756       34,783  
Equity in net income of joint ventures (E)
    5,469       6,510  
Minority equity interests (F)
    (2,274 )     (1,420 )
Income tax of taxable REIT subsidiaries and franchise taxes
    (449 )     (167 )
 
           
Income from continuing operations
    42,502       39,706  
Income from discontinued operations (G)
          1,185  
 
           
Income before gain on sales of real estate
    42,502       40,891  
Gain on sales of real estate, net of tax
    7,225       64,659  
 
           
Net income
  $ 49,727     $ 105,550  
 
           
Net income, applicable to common shareholders
  $ 35,935     $ 91,758  
 
           
Funds From Operations (“FFO”):
               
Net income applicable to common shareholders
  $ 35,935     $ 91,758  
Depreciation and amortization of real estate investments
    45,032       40,842  
Equity in net income of joint ventures (E)
    (5,469 )     (6,510 )
Joint ventures’ FFO (E)
    9,940       11,315  
Minority equity interests (OP Units) (F)
    534       729  
(Gain) loss on sales of depreciable real estate, net
    220       (39,063 )
 
           
FFO available to common shareholders
    86,192       99,071  
Preferred dividends
    13,792       13,792  
 
           
FFO
  $ 99,984     $ 112,863  
 
           
Per share data:
               
Earnings per common share
       
Basic
  $ 0.33     $ 0.85  
 
           
Diluted
  $ 0.33     $ 0.84  
 
           
Dividends Declared
  $ 0.59     $ 0.54  
 
           
Funds From Operations — Basic (H)
  $ 0.78     $ 0.90  
 
           
Funds From Operations — Diluted (H)
  $ 0.78     $ 0.90  
 
           
Basic — average shares outstanding (thousands) (H)
    108,962       108,005  
 
           
Diluted — average shares outstanding (thousands) (H)
    109,609       110,244  
 
           

 


 

DEVELOPERS DIVERSIFIED REALTY CORPORATION
Financial Highlights
(In thousands — except per share data)
 
(A)   Increases in base and percentage rental revenues for the three month period ended March 31, 2006 as compared 2005, aggregated $16.0 million consisting of $2.3 million related to leasing of core portfolio properties, including the Puerto Rican assets for two months (an increase of 2.1% from 2005), $16.3 million from the acquisition of assets, $1.4 million related to developments and redevelopments and $1.1 million due to the consolidation of a joint venture asset. These amounts were offset by a decrease of $0.9 million primarily related to one business center under redevelopment and $4.2 million due to the sale of properties in 2005 and 2006 to joint ventures. Included in the rental revenues for the three month periods ended March 31, 2006 and 2005 is approximately $3.6 million and $2.6 million, respectively, of revenue resulting from the recognition of straight line rents.
 
    Pursuant to the adoption of EITF 04-05 in January 2006, the Company consolidated a 67% owned joint venture located in Phoenix, Arizona, into its consolidated financial statements.
 
(B)   Other income for the three month periods ended March 31, 2006 and 2005 was comprised of the following (in millions):
                 
    Three Month Period  
    Ended March 31,  
    2006     2005  
Lease termination fees
  $ 6.5     $ 0.5  
Financings fees
          1.4  
Other miscellaneous
    0.1       0.2  
 
           
 
  $ 6.6     $ 2.1  
 
           
(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 three month periods ended March 31, 2006 and 2005, general and administrative expenses were approximately 5.0% and 4.8%, 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.

 


 

DEVELOPERS DIVERSIFIED REALTY CORPORATION
Financial Highlights
(In thousands — except per share data)
(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  
    Ended March 31,  
    2006     2005  
Revenues from operations (a)
  $ 105,811     $ 102,487  
 
           
Operating expense
    36,136       35,768  
Depreciation and amortization of real estate investments
    20,188       19,075  
Interest expense
    29,085       25,432  
 
           
 
    85,409       80,275  
 
           
Income from operations before gain on sales of real estate and discontinued operations
    20,402       22,212  
Gain on sales of real estate
    38       303  
Income from discontinued operations, net of tax
    309       169  
Gain on sales of discontinued operations, net of tax
    212       1,001  
 
           
Net income
  $ 20,961     $ 23,685  
 
           
DDR Ownership interests (b)
  $ 5,315     $ 6,494  
 
           
Funds From Operations from joint ventures are summarized as follows:
Net income
    20,961     $ 23,685  
Gain on sales of real estate, including discontinued operations
    (30 )     (330 )
Depreciation and amortization of real estate investments
    20,204       19,882  
 
           
 
  $ 41,135     $ 43,237  
 
           
DDRC Ownership interests (b)
  $ 9,940     $ 11,315  
 
           
DDRC Partnership distributions received (c)
  $ 8,024     $ 11,141  
 
           
  (a)   Revenues for the three month periods ended March 31, 2006 and 2005 included approximately $1.4 million in each period, resulting from the recognition of straight line rents of which the Company’s proportionate share is $0.3 million and $0.2 million, respectively.
 
  (b)   The Company’s share of joint venture net income has been increased by $0.1 million for the three month period ended March 31, 2006, to reflect additional basis depreciation and adjustments to gain on sales.
 
  (c)   At March 31, 2006 and 2005, the Company owned joint venture interests, excluding consolidated joint ventures, relating to 107 and 111 shopping center properties, respectively. In addition, at March 31, 2006 and 2005, respectively, the Company, through a joint venture, owned an interest of approximately 25% in 52 and 60 shopping center sites formerly owned by Service Merchandise, respectively.
 
  (d)   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  
    Ended March 31,  
    2006     2005  
Minority interests
  $ 1,740     $ 691  
Operating partnership units
    534       729  
 
           
 
  $ 2,274     $ 1,420  
 
           

 


 

DEVELOPERS DIVERSIFIED REALTY CORPORATION
Financial Highlights
(In thousands — except per share data)
(G)   The operating results relating to assets classified as discontinued operations are summarized as follows (in thousands):
         
    Three Month  
    Period Ended  
    March 31, 2005  
Revenues
  $ 7,136  
 
     
 
       
Expenses:
       
Operating
    2,704  
Interest, net
    1,315  
Depreciation
    1,946  
Minority interests
    (14 )
 
     
Total expenses
    5,951  
 
     
Net income
  $ 1,185  
 
     
(H)   For purposes of computing FFO per share (basic), the weighted average shares outstanding were adjusted to reflect the conversion of approximately 0.9 million and 1.3 million of Operating Partnership Units (OP Units) outstanding at March 31, 2006 and 2005, respectively, into 1.2 million and 1.3 million common shares of the Company for the three month periods ended March 31, 2006 and 2005, respectively, on a weighted average basis. The weighted average diluted shares and OP Units outstanding, for purposes of computing FFO, were approximately 111.0 million and 110.5 million for the three month periods ended March 31, 2006 and 2005, respectively.
 
    In February 2006, the Company issued 0.4 million common shares in exchange for OP Units issued in conjunction with assets acquired from Benderson Development Company.

 


 

DEVELOPERS DIVERSIFIED REALTY CORPORATION
Financial Highlights
(In thousands)
Selected Balance Sheet Data:
                 
    March 31, 2006 (A)     December 31, 2005 (A)  
Assets:
               
Real estate and rental property:
               
Land
  $ 1,776,894     $ 1,721,321  
Buildings
    4,956,509       4,806,373  
Fixtures and tenant improvements
    169,870       152,958  
Construction in progress
    393,696       348,685  
 
           
 
    7,296,969       7,029,337  
Less accumulated depreciation
    (743,872 )     (692,823 )
 
           
Real estate, net
    6,553,097       6,336,514  
 
               
Cash
    39,967       30,655  
Advances to and investments in joint ventures (B)
    247,944       275,136  
Notes receivable
    24,345       24,996  
Receivables, including straight line rent, net
    99,954       112,464  
Other assets, net
    80,347       83,212  
 
           
 
  $ 7,045,654     $ 6,862,977  
 
           
 
               
Liabilities:
               
Indebtedness:
               
Revolving credit facilities
  $ 150,000     $ 150,000  
Variable rate unsecured term debt
    200,000       200,000  
Unsecured debt
    1,966,505       1,966,268  
Mortgage and other secured debt
    1,757,241       1,574,733  
 
           
 
    4,073,746       3,891,001  
Dividends payable
    71,651       65,799  
Other liabilities
    197,024       204,447  
 
           
 
    4,342,421       4,161,247  
Minority interests
    124,214       131,449  
Shareholders’ equity
    2,579,019       2,570,281  
 
           
 
  $ 7,045,654     $ 6,862,977  
 
           
 
(A)   Amounts include the consolidation of the Mervyns, 50% owned joint venture, formed in September 2005, which includes $405.8 million and $394.7 million of real estate assets at March 31, 2006 and December 31, 2005, respectively, $258.5 million of mortgage debt in each period and $79.9 million and $75.1 million of minority interests at March 31, 2006 and December 31, 2005, respectively.
 
(B)   Includes $90.5 million and $91.6 million of advances to the Service Merchandise Joint Venture at March 31, 2006 and December 31, 2005, respectively, 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:
                 
    March 31, 2006     December 31, 2005  
Land
  $ 870,056     $ 894,477  
Buildings
    2,378,266       2,480,025  
Fixtures and tenant improvements
    64,081       58,060  
Construction in progress
    37,913       37,550  
 
           
 
    3,350,316       3,470,112  
Accumulated depreciation
    (198,560 )     (195,708 )
 
           
Real estate, net
    3,151,756       3,274,404  
Receivables, including straight line rent, net
    68,464       76,744  
Leasehold interests
    22,818       23,297  
Other assets
    104,068       109,490  
 
           
 
  $ 3,347,106     $ 3,483,935  
 
           
 
               
Mortgage debt (a)
  $ 2,082,424     $ 2,173,401  
Notes and accrued interest payable to DDR
    107,739       108,020  
Other liabilities
    73,856       78,406  
 
           
 
    2,264,019       2,359,827  
Accumulated equity
    1,083,087       1,124,108  
 
           
 
  $ 3,347,106     $ 3,483,935  
 
           
 
(a)   The Company’s proportionate share of joint venture debt aggregated approximately $478.6 million and $510.5 million at March 31, 2006 and December 31, 2005, respectively.

 

 

Exhibit 99.2
(DEVELOPERS DIVERSIFIEED REALTY)
Quarterly Financial Supplement
For the three months ended
March 31, 2006
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 three months ended March 31, 2006
 
 
     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, 2005.


 

Developers Diversified Realty
Quarterly Financial Supplement
For the three months ended March 31, 2006
 
 
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
    3.4  
and Corporate Debt Maturities
       
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 and   Vice President of Investor Relations
 
  Chief Executive Officer   216-755-5455
 
  216-755-5500    
DEVELOPERS DIVERSIFIED REALTY REPORTS DILUTED FFO
PER SHARE OF $0.78 FOR THE QUARTER ENDED MARCH 31, 2006
      CLEVELAND, OHIO, April 27, 2006 — Developers Diversified Realty Corporation (NYSE: DDR), the nation’s leading owner, manager and developer of market-dominant community centers, today reported operating results for the first quarter ended March 31, 2006.
    Funds From Operations (“FFO”) per diluted share was $0.78 and net income per diluted share was $0.33
 
    Core portfolio leased percentage increased 40 basis points over the prior year to 95.9%
 
    Executed leases during the first quarter totaled approximately 1.4 million square feet, including 96 new leases and 177 renewals
 
    Base rents increased 28.4% on new leases, 11.3% on renewals and 16.2% on a blended basis
 
    Same store net operating income (“NOI”) increased 2.3% over the prior period
     Scott Wolstein, Developers Diversified’s Chairman and Chief Executive Officer stated, “I’m pleased to report this quarter’s financial results. We continue to see intense tenant demand for space, which is reflected in our operating portfolio metrics and in leasing activity at our development projects. In addition, our proactive balance sheet management continues to reduce financial risk and improve our liquidity and flexibility.”
      Financial Results:
     FFO, a widely accepted measure of REIT performance, on a diluted and basic per share basis was $0.78 as compared to $0.90 for the same period in the previous year, a decrease of 13.3%. FFO available to common shareholders was $86.2 million for the quarter ended March 31, 2006, as compared to $99.1 million for the first quarter of 2005, a decrease of 13.0%. Net income available to common shareholders for the three months ended March 31, 2006 was $35.9 million or $0.33 per share (diluted and basic) compared to first quarter 2005 net income of $91.8 million, or $0.84 per share (diluted) and $0.85 per share (basic). The decrease in net income and FFO for the quarter ended March 31, 2006 is primarily related to a decrease in gain on sale of real estate assets as compared to 2005.
     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, (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 first quarter of 2006, the Company executed 96 new leases aggregating 685,421 square feet and 177 renewals aggregating 676,720 square feet. Rental rates on new leases increased by 28.4% and rental rates on renewals increased by 11.3%. On a blended basis, rental rates for new leases and renewals increased by 16.2%. At March 31, 2006, the average annualized base rent per occupied square foot, including those properties owned through joint ventures, was $11.50, as compared to $11.27 at March 31, 2005.
     At March 31, 2006, the portfolio, including those properties owned through joint ventures, was 96.1% leased. Excluding the impact of the properties acquired from Mervyns, the portfolio was 95.9% leased, as compared to 95.5% at March 31, 2005. 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 March 31, 2006, the portfolio was 95.2% occupied. Excluding the impact of the properties acquired from Mervyns, the portfolio was 95.0% occupied, as compared to 94.9% at March 31, 2005.
Strategic Real Estate Transactions:
MDT Joint Venture
     In March 2006, the Company sold newly developed expansion areas located in Birmingham, Alabama and Monaca, Pennsylvania, aggregating 0.6 million square feet to the MDT Joint Venture for approximately $14.6 million. The Company recognized an aggregate merchant build gain of $5.5 million, and deferred gains of approximately $1.0 million relating to the Company’s effective 14.5% ownership interest in the venture. These expansion areas are adjacent to shopping centers currently owned by the MDT Joint Venture.
Acquisitions
     In January 2006, the Company acquired its partner’s 75% ownership interest in a shopping center located in Pasadena, California for $55.9 million in addition to assuming the partner’s proportionate share of the $85 million of existing mortgage debt (or $63.75 million) which was repaid following the acquisition. The total shopping center was valued at approximately $175 million, and DDR earned a promoted interest of approximately $13 million which has not been included in earnings but as an adjustment to the Company’s cost basis in the asset.

 


 

     Following the date of acquisition, this previously unconsolidated joint venture is consolidated into the Company’s consolidated financial statements.
Expansions:
     During the three month period ended March 31, 2006, the Company completed two expansions and redevelopment projects located in Ocala, Florida and Rome, New York at an aggregate cost of $6.1 million. The Company is currently expanding/redeveloping eight shopping centers located in Gadsden, Alabama; Lakeland, Florida; Stockbridge, Georgia; Ottumwa, Iowa; Gaylord, Michigan; Olean, New York; Mooresville, North Carolina and Bayamon, Puerto Rico at a projected aggregate cost of approximately $40.5 million. The Company anticipates commencing construction on three additional expansion and redevelopment projects at shopping centers located in Birmingham, Alabama; Hamilton, New Jersey and Amherst, New York.
     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 $58.1 million. Two of the Company’s joint ventures anticipate commencing expansion/redevelopment projects at their shopping centers located in Deer Park, Illinois and Kirkland, Washington.
Development (Consolidated):
     As of March 31, 2006, the Company has substantially completed the construction of the Freehold, New Jersey shopping center, which has an aggregate cost of $25.4 million.
     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 $480.7 million and will create an additional 4.3 million square feet of gross leasable retail space. At March 31, 2006, approximately $204.2 million of costs were incurred in relation to these development projects.
     The Company anticipates commencing construction in 2006 on four additional shopping centers located in Homestead, Florida; Norwood, Massachusetts; Seabrook, New Hampshire and McKinney, Texas.
Development (Joint Ventures):
     Three of the Company’s joint ventures currently have shopping center projects under construction. These projects have an aggregate projected cost of approximately $117.2 million. These projects are located in Merriam, Kansas; 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 majority of the project located in San Antonio, Texas was substantially completed during 2005. The remaining projects are scheduled for completion during 2007. At March 31, 2006, approximately $57.7 million of costs were incurred in relation to these development projects.
Financing:
     In March 2006, the Company executed the accordion feature of the secured term loan agreement with KeyBank Capital Markets and Banc of America Securities LLC (Joint Arrangers), that provided for the increase of the secured term loan to $400 million from $220 million.

 


 

     Developers Diversified Realty Corporation currently owns and manages approximately 500 retail operating and development properties in 44 states, plus Puerto Rico, comprising approximately 114 million square feet of real estate. Developers Diversified Realty 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, 2005.

 


 

DEVELOPERS DIVERSIFIED REALTY CORPORATION
Financial Highlights
(In thousands — except per share data)
                 
    Three Month Period  
    Ended March 31  
Revenues:   2006     2005  
Minimum rents (A)
  $ 139,992     $ 123,105  
Percentage and overage rents (A)
    2,241       2,006  
Recoveries from tenants
    42,059       37,055  
Ancillary income
    2,995       1,777  
Other property related income
    2,297       1,056  
Management fee income
    5,694       4,292  
Development fees
    666       488  
Other (B)
    6,582       2,133  
 
           
 
    202,526       171,912  
 
           
Expenses:
               
Operating and maintenance
    25,914       23,507  
Real estate taxes
    23,124       20,587  
General and administrative (C)
    15,410       13,330  
Depreciation and amortization
    46,943       39,451  
 
           
 
    111,391       96,875  
 
           
Other income (expense):
               
Interest income
    3,121       1,009  
Interest expense
    (54,000 )     (40,650 )
Other expense (D)
    (500 )     (613 )
 
           
 
    (51,379 )     (40,254 )
 
           
Income before equity in net income of joint ventures, minority equity interests, income tax of taxable REIT subsidiaries and franchise taxes, discontinued operations and gain on sales of real estate
    39,756       34,783  
Equity in net income of joint ventures (E)
    5,469       6,510  
Minority equity interests (F)
    (2,274 )     (1,420 )
Income tax of taxable REIT subsidiaries and franchise taxes
    (449 )     (167 )
 
           
Income from continuing operations
    42,502       39,706  
Income from discontinued operations (G)
          1,185  
 
           
Income before gain on sales of real estate
    42,502       40,891  
Gain on sales of real estate, net of tax
    7,225       64,659  
 
           
Net income
  $ 49,727     $ 105,550  
 
           
Net income, applicable to common shareholders
  $ 35,935     $ 91,758  
 
           
Funds From Operations (“FFO”):
               
Net income applicable to common shareholders
  $ 35,935     $ 91,758  
Depreciation and amortization of real estate investments
    45,032       40,842  
Equity in net income of joint ventures (E)
    (5,469 )     (6,510 )
Joint ventures’ FFO (E)
    9,940       11,315  
Minority equity interests (OP Units) (F)
    534       729  
(Gain) loss on sales of depreciable real estate, net
    220       (39,063 )
 
           
FFO available to common shareholders
    86,192       99,071  
Preferred dividends
    13,792       13,792  
 
           
FFO
  $ 99,984     $ 112,863  
 
           
Per share data:
               
Earnings per common share
       
Basic
  $ 0.33     $ 0.85  
 
           
Diluted
  $ 0.33     $ 0.84  
 
           
Dividends Declared
  $ 0.59     $ 0.54  
 
           
Funds From Operations — Basic (H)
  $ 0.78     $ 0.90  
 
           
Funds From Operations — Diluted (H)
  $ 0.78     $ 0.90  
 
           
Basic — average shares outstanding (thousands) (H)
    108,962       108,005  
 
           
Diluted — average shares outstanding (thousands) (H)
    109,609       110,244  
 
           

 


 

DEVELOPERS DIVERSIFIED REALTY CORPORATION
Financial Highlights
(In thousands — except per share data)
 
(A)   Increases in base and percentage rental revenues for the three month period ended March 31, 2006 as compared 2005, aggregated $16.0 million consisting of $2.3 million related to leasing of core portfolio properties, including the Puerto Rican assets for two months (an increase of 2.1% from 2005), $16.3 million from the acquisition of assets, $1.4 million related to developments and redevelopments and $1.1 million due to the consolidation of a joint venture asset. These amounts were offset by a decrease of $0.9 million primarily related to one business center under redevelopment and $4.2 million due to the sale of properties in 2005 and 2006 to joint ventures. Included in the rental revenues for the three month periods ended March 31, 2006 and 2005 is approximately $3.6 million and $2.6 million, respectively, of revenue resulting from the recognition of straight line rents.
 
    Pursuant to the adoption of EITF 04-05 in January 2006, the Company consolidated a 67% owned joint venture located in Phoenix, Arizona, into its consolidated financial statements.
 
(B)   Other income for the three month periods ended March 31, 2006 and 2005 was comprised of the following (in millions):
                 
    Three Month Period  
    Ended March 31,  
    2006     2005  
Lease termination fees
  $ 6.5     $ 0.5  
Financings fees
          1.4  
Other miscellaneous
    0.1       0.2  
 
           
 
  $ 6.6     $ 2.1  
 
           
(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 three month periods ended March 31, 2006 and 2005, general and administrative expenses were approximately 5.0% and 4.8%, 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.

 


 

DEVELOPERS DIVERSIFIED REALTY CORPORATION
Financial Highlights
(In thousands — except per share data)
(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  
    Ended March 31,  
    2006     2005  
Revenues from operations (a)
  $ 105,811     $ 102,487  
 
           
Operating expense
    36,136       35,768  
Depreciation and amortization of real estate investments
    20,188       19,075  
Interest expense
    29,085       25,432  
 
           
 
    85,409       80,275  
 
           
Income from operations before gain on sales of real estate and discontinued operations
    20,402       22,212  
Gain on sales of real estate
    38       303  
Income from discontinued operations, net of tax
    309       169  
Gain on sales of discontinued operations, net of tax
    212       1,001  
 
           
Net income
  $ 20,961     $ 23,685  
 
           
DDR Ownership interests (b)
  $ 5,315     $ 6,494  
 
           
Funds From Operations from joint ventures are summarized as follows:
Net income
    20,961     $ 23,685  
Gain on sales of real estate, including discontinued operations
    (30 )     (330 )
Depreciation and amortization of real estate investments
    20,204       19,882  
 
           
 
  $ 41,135     $ 43,237  
 
           
DDRC Ownership interests (b)
  $ 9,940     $ 11,315  
 
           
DDRC Partnership distributions received (c)
  $ 8,024     $ 11,141  
 
           
  (a)   Revenues for the three month periods ended March 31, 2006 and 2005 included approximately $1.4 million in each period, resulting from the recognition of straight line rents of which the Company’s proportionate share is $0.3 million and $0.2 million, respectively.
 
  (b)   The Company’s share of joint venture net income has been increased by $0.1 million for the three month period ended March 31, 2006, to reflect additional basis depreciation and adjustments to gain on sales.
 
  (c)   At March 31, 2006 and 2005, the Company owned joint venture interests, excluding consolidated joint ventures, relating to 107 and 111 shopping center properties, respectively. In addition, at March 31, 2006 and 2005, respectively, the Company, through a joint venture, owned an interest of approximately 25% in 52 and 60 shopping center sites formerly owned by Service Merchandise, respectively.
 
  (d)   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  
    Ended March 31,  
    2006     2005  
Minority interests
  $ 1,740     $ 691  
Operating partnership units
    534       729  
 
           
 
  $ 2,274     $ 1,420  
 
           

 


 

DEVELOPERS DIVERSIFIED REALTY CORPORATION
Financial Highlights
(In thousands — except per share data)
(G)   The operating results relating to assets classified as discontinued operations are summarized as follows (in thousands):
         
    Three Month  
    Period Ended  
    March 31, 2005  
Revenues
  $ 7,136  
 
     
 
       
Expenses:
       
Operating
    2,704  
Interest, net
    1,315  
Depreciation
    1,946  
Minority interests
    (14 )
 
     
Total expenses
    5,951  
 
     
Net income
  $ 1,185  
 
     
(H)   For purposes of computing FFO per share (basic), the weighted average shares outstanding were adjusted to reflect the conversion of approximately 0.9 million and 1.3 million of Operating Partnership Units (OP Units) outstanding at March 31, 2006 and 2005, respectively, into 1.2 million and 1.3 million common shares of the Company for the three month periods ended March 31, 2006 and 2005, respectively, on a weighted average basis. The weighted average diluted shares and OP Units outstanding, for purposes of computing FFO, were approximately 111.0 million and 110.5 million for the three month periods ended March 31, 2006 and 2005, respectively.
 
    In February 2006, the Company issued 0.4 million common shares in exchange for OP Units issued in conjunction with assets acquired from Benderson Development Company.

 


 

DEVELOPERS DIVERSIFIED REALTY CORPORATION
Financial Highlights
(In thousands)
Selected Balance Sheet Data:
                 
    March 31, 2006 (A)     December 31, 2005 (A)  
Assets:
               
Real estate and rental property:
               
Land
  $ 1,776,894     $ 1,721,321  
Buildings
    4,956,509       4,806,373  
Fixtures and tenant improvements
    169,870       152,958  
Construction in progress
    393,696       348,685  
 
           
 
    7,296,969       7,029,337  
Less accumulated depreciation
    (743,872 )     (692,823 )
 
           
Real estate, net
    6,553,097       6,336,514  
 
               
Cash
    39,967       30,655  
Advances to and investments in joint ventures (B)
    247,944       275,136  
Notes receivable
    24,345       24,996  
Receivables, including straight line rent, net
    99,954       112,464  
Other assets, net
    80,347       83,212  
 
           
 
  $ 7,045,654     $ 6,862,977  
 
           
 
               
Liabilities:
               
Indebtedness:
               
Revolving credit facilities
  $ 150,000     $ 150,000  
Variable rate unsecured term debt
    200,000       200,000  
Unsecured debt
    1,966,505       1,966,268  
Mortgage and other secured debt
    1,757,241       1,574,733  
 
           
 
    4,073,746       3,891,001  
Dividends payable
    71,651       65,799  
Other liabilities
    197,024       204,447  
 
           
 
    4,342,421       4,161,247  
Minority interests
    124,214       131,449  
Shareholders’ equity
    2,579,019       2,570,281  
 
           
 
  $ 7,045,654     $ 6,862,977  
 
           
 
(A)   Amounts include the consolidation of the Mervyns, 50% owned joint venture, formed in September 2005, which includes $405.8 million and $394.7 million of real estate assets at March 31, 2006 and December 31, 2005, respectively, $258.5 million of mortgage debt in each period and $79.9 million and $75.1 million of minority interests at March 31, 2006 and December 31, 2005, respectively.
 
(B)   Includes $90.5 million and $91.6 million of advances to the Service Merchandise Joint Venture at March 31, 2006 and December 31, 2005, respectively, 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:
                 
    March 31, 2006     December 31, 2005  
Land
  $ 870,056     $ 894,477  
Buildings
    2,378,266       2,480,025  
Fixtures and tenant improvements
    64,081       58,060  
Construction in progress
    37,913       37,550  
 
           
 
    3,350,316       3,470,112  
Accumulated depreciation
    (198,560 )     (195,708 )
 
           
Real estate, net
    3,151,756       3,274,404  
Receivables, including straight line rent, net
    68,464       76,744  
Leasehold interests
    22,818       23,297  
Other assets
    104,068       109,490  
 
           
 
  $ 3,347,106     $ 3,483,935  
 
           
 
               
Mortgage debt (a)
  $ 2,082,424     $ 2,173,401  
Notes and accrued interest payable to DDR
    107,739       108,020  
Other liabilities
    73,856       78,406  
 
           
 
    2,264,019       2,359,827  
Accumulated equity
    1,083,087       1,124,108  
 
           
 
  $ 3,347,106     $ 3,483,935  
 
           
 
(a)   The Company’s proportionate share of joint venture debt aggregated approximately $478.6 million and $510.5 million at March 31, 2006 and December 31, 2005, respectively.

 


 

Developers Diversified Realty
Quarterly Financial Supplement
For the Three Months Ended March 31, 2006
FINANCIAL HIGHLIGHTS
(In Thousands Except Per Share Information)
                                                 
    Three Month     Three Month        
    Period Ended     Period Ended        
    March 31     March 31     Year Ended December 31  
    2006     2005     2005     2004     2003     2002  
FUNDS FROM OPERATIONS:
                                               
Net Income Applicable to Common Shareholders
  $ 35,935     $ 91,758     $ 227,474     $ 219,056     $ 189,056    (7)   $ 69,368    (7)
Depreciation and Amortization of Real Estate Investments
  $ 45,032     $ 40,843     $ 169,117     $ 130,537     $ 93,173     $ 76,462  
Equity in Net Income From Joint Ventures
  $ (5,469 )   $ (6,511 )   $ (34,873 )   $ (40,896 )   $ (52,917 )   $ (32,769 )
Joint Venture Funds From Operations
  $ 9,940     $ 11,315     $ 49,302     $ 46,209     $ 47,942     $ 44,473  
Operating Partnership Minority Interest Expense
  $ 534     $ 729     $ 2,916     $ 2,607     $ 1,770     $ 1,450  
Cumulative Effect & Extraordinary Charges
  $ 0     $ 0     $ 0     $ 3,001     $ 0     $ 0  
Gain on Sales of Real Estate
  $ 221     $ (39,063 )   $ (58,834 )   $ (68,179 )   $ (67,352 )   $ (4,276 )
 
                                   
FUNDS FROM OPERATIONS AVAILABLE TO COMMON SHAREHOLDERS
  $ 86,192     $ 99,071     $ 355,102     $ 292,335     $ 211,672     $ 154,709  
PREFERRED DIVIDENDS
  $ 13,792     $ 13,792     $ 55,169     $ 50,706     $ 51,204    (7)   $ 32,602    (7)
 
                                   
FUNDS FROM OPERATIONS
  $ 99,984     $ 112,864     $ 410,271     $ 343,041     $ 262,877     $ 187,311  
 
                                   
 
                                               
PER SHARE INFORMATION:
                                               
Funds From Operations — Diluted
  $ 0.78     $ 0.90     $ 3.21     $ 2.95     $ 2.51     $ 2.35  
Net Income — Diluted
  $ 0.33     $ 0.84     $ 2.08     $ 2.24     $ 2.27     $ 1.07  
Cash Dividends
  $ 0.59     $ 0.54     $ 2.16     $ 1.94     $ 1.69     $ 1.52  
 
                                               
WEIGHTED AVERAGE SHARES AND OPERATING PARTNERSHIP UNITS, FFO
    110,973       110,471       110,700       99,147       84,319       65,910  
 
                                               
TOTAL MARKET CAPITALIZATION (1)
  $ 10,833,305     $ 8,675,674     $ 9,781,900     $ 8,276,943     $ 5,551,748     $ 3,460,243  
DEBT TO TOTAL MARKET CAPITALIZATION (1)
    37.60 %     41.51 %     39.77 %     32.82 %     37.42 %     43.10 %
DEBT TO TOTAL UNDEPRECIATED ASSETS, INVESTMENTS, CASH & NOTES REC.
    53.54 %     51.84 %     52.86 %     45.58 %     48.68 %     48.26 %
DIVIDEND PAYOUT RATIO (1)
    75.67 %     59.91 %     66.98 %     67.28 %     66.03 %     62.73 %
 
                                               
GEN. & ADMIN. EXPENSES AS A PERCENTAGE OF TOTAL REVENUES (2)
    4.99 %     4.80 %     4.55 %     4.94 %     5.35 %     4.80 %
 
                                               
GENERAL AND ADMINISTRATIVE EXPENSES
  $ 15,410     $ 13,643     $ 54,048     $ 47,126     $ 40,820     $ 29,392  
 
                                               
REVENUES:
                                               
DDR Revenues
  $ 202,526     $ 179,048     $ 748,571     $ 605,246     $ 478,696     $ 360,778  
Joint Venture Revenues
  $ 106,508     $ 105,358     $ 438,103     $ 348,740     $ 284,158     $ 251,905  
 
                                   
TOTAL REVENUES (3)
  $ 309,033     $ 284,406     $ 1,186,675     $ 953,987     $ 762,853     $ 612,683  
 
                                   
 
                                               
NET OPERATING INCOME:
                                               
DDR Net Operating Income
  $ 153,488     $ 132,082     $ 555,291     $ 453,501     $ 356,348     $ 272,764  
Joint Venture Net Operating Income
  $ 70,303     $ 68,391     $ 280,617     $ 228,358     $ 184,927     $ 167,573  
 
                                   
TOTAL NET OPERATING INCOME (4)
  $ 223,790     $ 200,473     $ 835,907     $ 681,859     $ 541,274     $ 440,337  
 
                                   
 
                                               
REAL ESTATE AT COST:
                                               
DDR Real Estate at Cost
  $ 7,296,969     $ 6,585,739     $ 7,029,337     $ 5,603,424     $ 3,884,911     $ 2,804,056  
Joint Venture Real Estate at Cost (5)
  $ 3,350,316     $ 3,472,305     $ 3,470,112     $ 3,165,335     $ 2,275,216     $ 1,785,165  
 
                                   
TOTAL REAL ESTATE AT COST (6)
  $ 10,647,285     $ 10,058,044     $ 10,499,449     $ 8,768,759     $ 6,160,127     $ 4,589,221  
 
                                   
 
(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 March 31, 2006 of $431.6 million (includes $37.9 million of CIP included in joint ventures, of which $6.9 million represents the Company’s proportionate share), and at December 31, 2005, 2004, 2003, 2002 CIP aggregated $386.2 million, $271.0 million $290.7 million and $237.8 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 Three Months Ended March 31, 2006
MARKET CAPITALIZATION & FINANCIAL RATIOS
                                         
    Three Month        
    Period Ended        
    March 31     Year Ended December 31  
    2006     2005     2004     2003     2002  
DDR RATIO OF DEBT TO TOTAL MARKET CAP:
                                       
Total Debt
  $ 4,073,746     $ 3,890,709     $ 2,716,426     $ 2,077,558     $ 1,491,481  
Total Market Capitalization *
  $ 10,833,305     $ 9,781,900     $ 8,276,943     $ 5,551,748     $ 3,460,243  
 
                             
 
    37.60 %     39.77 %     32.82 %     37.42 %     43.10 %
 
                                       
DDR DEBT TO UNDEPRECIATED REAL ESTATE ASSETS, INVESTMENTS AND NOTES RECEIVABLE
    53.54 %     52.86 %     45.58 %     48.68 %     48.26 %
 
                                       
DDR, INCLUDING PROPORTIONATE SHARE OF JV DEBT, TOTAL MARKET CAPITALIZATION:
                                       
Total Debt *
  $ 4,552,373     $ 4,401,169     $ 3,137,184     $ 2,446,026     $ 1,878,575  
Total Market Capitalization *
  $ 11,311,932     $ 10,292,361     $ 8,697,701     $ 5,920,216     $ 3,847,336  
 
                             
 
    40.24 %     42.76 %     36.07 %     41.32 %     48.83 %
 
                                       
DDR & JV DEBT TO UNDEPRECIATED REAL ESTATE ASSETS, INVESTMENTS & NOTES RECEIVABLE
    56.15 %     55.84 %     49.27 %     53.79 %     54.20 %
 
                                       
INTEREST COVERAGE RATIO:
                                       
Interest Expense (1)
  $ 50,197     $ 182,365     $ 130,447     $ 90,162     $ 77,208  
FFO Before Interest and Preferred Dividends *
  $ 150,181     $ 592,636     $ 473,488     $ 353,039     $ 282,856  
 
                             
 
    2.99       3.25       3.63       3.92       3.66  
 
                                       
DEBT SERVICE COVERAGE RATIO:
                                       
Debt Service * (1)
  $ 58,380     $ 215,519     $ 152,927     $ 101,890     $ 83,958  
FFO Before Interest and Preferred Dividends *
  $ 150,181     $ 592,636     $ 473,488     $ 353,039     $ 282,856  
 
                             
 
    2.57       2.75       3.10       3.46       3.37  
 
                                       
FIXED CHARGES (INCLUDING PREFERRED DIVIDENDS) COVERAGE RATIO
                                       
Fixed Charges (1)
  $ 72,172     $ 270,688     $ 203,633     $ 142,385     $ 129,353  
FFO Before Interest and Preferred Dividends *
  $ 150,181     $ 592,636     $ 473,488     $ 353,039     $ 282,856  
 
                             
 
    2.08       2.19       2.33       2.48       2.19  
 
                                       
DIVIDEND PAYOUT RATIO
                                       
Common Share Dividends and Operating Partnership Interest
  $ 65,218     $ 237,856     $ 196,685     $ 146,846     $ 100,531  
Funds From Operations exclusive of charge associated with preferred stock redemption
  $ 86,192     $ 355,102     $ 292,335     $ 222,382     $ 160,253  
 
                             
 
    0.76       0.67       0.67       0.66       0.63  
 
*   See Attached for Detail Calculation
 
(1)   Amounts have been adjusted to eliminate interest and debt service costs of joint venture consolidations due to FIN 46 as FFO does not include the joint venture partners’ proportionate share.
Market Capitalization and Financial Ratios 2.2

 


 

Developers Diversified Realty
Quarterly Financial Supplement
For the Three Months Ended March 31, 2006
                                         
    Three Month                
    Period Ended                
    March 31       Year Ended December 31  
    2006     2005     2004     2003     2002  
DDR TOTAL MARKET CAPITALIZATION
                                       
Common Shares Outstanding
    109,681       108,948       108,083       86,425       66,609  
Operating Partnership Units Outstanding
    905       1,350       1,350       1,129       911  
 
                             
Total
    110,586       110,298       109,432       87,554       67,520  
Share Price
  $ 54.75     $ 47.02     $ 44.37     $ 33.57     $ 21.99  
 
                             
Market Value of Common Shares
  $ 6,054,559     $ 5,186,192     $ 4,855,516     $ 2,939,190     $ 1,484,762  
 
                                       
Preferred Shares at Book Value
  $ 705,000     $ 705,000     $ 705,000     $ 535,000     $ 304,000  
Preferred Units and Warrant
  $ 0     $ 0     $ 0     $ 0     $ 180,000  
Total Debt
  $ 4,073,746   (1)   $ 3,890,709   (1)   $ 2,716,426     $ 2,077,558     $ 1,491,481  
 
                             
TOTAL MARKET CAPITALIZATION
  $ 10,833,305     $ 9,781,900     $ 8,276,943     $ 5,551,748     $ 3,460,243  
 
                             
 
                                       
DDR TOTAL MARKET CAPITALIZATION — INCLUDING PROPORTIONATE SHARE OF JV DEBT
                                       
Common Shares Outstanding
    109,681       108,948       108,083       86,425       66,609  
Operating Partnership Units Outstanding
    905       1,350       1,350       1,129       911  
 
                             
Total
    110,586       110,298       109,432       87,554       67,520  
Share Price
  $ 54.75     $ 47.02     $ 44.37     $ 33.57     $ 21.99  
 
                             
Market Value of Common Shares
  $ 6,054,559     $ 5,186,192     $ 4,855,516     $ 2,939,190     $ 1,484,762  
Preferred Shares at Book Value
  $ 705,000     $ 705,000     $ 705,000     $ 535,000     $ 304,000  
Preferred Units and Warrant
  $ 0     $ 0     $ 0     $ 0     $ 180,000  
Total Debt
  $ 4,073,746   (1)   $ 3,890,709   (1)   $ 2,716,426     $ 2,077,558     $ 1,491,481  
Proportionate Share of JV Debt
  $ 478,627     $ 510,460     $ 420,758     $ 368,468     $ 387,094  
 
                             
TOTAL MARKET CAPITALIZATION
  $ 11,311,932     $ 10,292,361     $ 8,697,701     $ 5,920,216     $ 3,847,336  
 
                             
 
(1)   Includes $280.4 million of consolidated joint venture debt at March 31, 2006 (of which $137.3 million represents the joint venture partners’ share) and $280.5 million at December 31, 2005.
Market Capitalization and Financial Ratios 2.2

 


 

Developers Diversified Realty
Quarterly Financial Supplement
For the Three Months Ended March 31, 2006
                                         
    Three Month        
    Period Ended        
    March 31     Year Ended December 31  
    2006     2005     2004     2003     2002  
UNDEPRECIATED REAL ESTATE ASSETS, CASH, INVESTMENTS & NOTES RECEIVABLE
                                       
Undepreciated Real Estate Assets
  $ 7,296,969     $ 7,029,337     $ 5,603,424     $ 3,884,911     $ 2,804,056  
Cash and Cash Equivalents
  $ 39,967     $ 30,655     $ 49,871     $ 111,033     $ 16,371  
Notes Receivable
  $ 24,345     $ 24,996     $ 17,823     $ 9,813     $ 11,662  
Advances and Investments in Joint Ventures
  $ 247,944     $ 275,136     $ 288,020     $ 262,072     $ 258,611  
 
                             
 
  $ 7,609,226     $ 7,360,124     $ 5,959,138     $ 4,267,829     $ 3,090,699  
 
                             
DDR & JV UNDEPRECIATED REAL ESTATE ASSETS, INVESTMENTS & NOTES RECEIVABLE
                                       
Undepreciated Real Estate Assets
  $ 7,296,969     $ 7,029,337     $ 5,603,424     $ 3,884,911     $ 2,804,056  
Notes Receivable or Proportionate Share Thereof
  $ 118,512     $ 116,212     $ 44,536     $ 41,018     $ 50,521  
Proportionate Share of JV Undepreciated Real Estate Assets
  $ 692,037     $ 736,109     $ 719,619     $ 621,113     $ 611,224  
 
                             
 
  $ 8,107,518     $ 7,881,658     $ 6,367,578     $ 4,547,043     $ 3,465,801  
 
                             
FUNDS FROM OPERATIONS BEFORE INTEREST AND PREFERRED DIVIDENDS
                                       
FFO
  $ 86,192     $ 355,102     $ 292,335     $ 211,672     $ 154,709  
Interest Expense
  $ 54,000     $ 186,196     $ 130,447     $ 90,162     $ 77,208  
Adjustment to interest expense for consolidated joint ventures due to FIN 46
    ($3,803 )     ($3,830 )   $ 0     $ 0     $ 0  
Preferred Dividends, Including Preferred Operating Minority Interest & D-42 Dividend
  $ 13,792     $ 55,169     $ 50,706     $ 51,204     $ 50,939  
 
                             
 
  $ 150,181     $ 592,636     $ 473,488     $ 353,039     $ 282,856  
 
                             
DEBT SERVICE
                                       
Interest Expense
  $ 54,000     $ 186,196     $ 130,447     $ 90,162     $ 77,208  
Adjustment to interest expense for consolidated joint ventures due to FIN 46
    ($3,803 )     ($3,830 )   $ 0     $ 0     $ 0  
Recurring Principal Amortization
  $ 8,183     $ 33,154     $ 22,480     $ 11,728     $ 6,750  
 
                             
 
  $ 58,380     $ 215,519     $ 152,927     $ 101,890     $ 83,958  
 
                             
FIXED CHARGES
                                       
Debt Service
  $ 58,380     $ 215,519     $ 152,927     $ 101,890     $ 83,958  
Preferred Dividends, Including Preferred Operating Minority Interest and excluding non-cash
  $ 13,792     $ 55,169     $ 50,706     $ 40,494     $ 45,395  
 
                             
D-42 dividend.
  $ 72,172     $ 270,688     $ 203,633     $ 142,385     $ 129,353  
 
                             
Market Capitalization and Financial Ratios 2.2

 


 

$10.8 Billion Total Capitalization as of March 31, 2006 Common Shares Equity (2) $6,054.6 53% Perpetual Preferred Stock $705.0 7% Fixed Rate Unsecured Debt $1,906.5 19% Floating Rate Unsecured Debt $60.0 1% Construction Finance $66.9 1% Variable Rate Revolving Credit and Term Debt $750.0 6% Mortgage Debt (3) $1,290.3 13% (1) Figures in millions unless otherwise noted. (2) Market Value ($54.75 per share as of March 31, 2006) includes operating partnership units equivalent to approximately 0.9 million of the Company's common shares. (3) Does not include proportionate share of joint venture debt aggregating $478.6 million. However, it does include 100% of consolidated joint venture debt, primarily Mervyn's, of which $137.3 million is joint venture partners' share.


 

Developers Diversified Realty
Quarterly Financial Supplement
For the three months ended March 31, 2006

 
 

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
and Tenant Improvements
  Useful lives, which approximate
lease terms, where applicable
 


Significant Accounting Policies 2.4

 


 

Developers Diversified Realty
Quarterly Financial Supplement
For the three months ended March 31, 2006

 
 

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. At December 31, 2005, the Company estimated the value of the unleased outparcels and expansion pads at approximately $58 million.
 
  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 three month period ended March 31, 2006 and for the years ended December 31, 2005, 2004, 2003, and 2002, the Company capitalized interest of $4.2 million, $12.5 million, $10.0 million, $11.4 million and $9.5 million, respectively.
 
  In addition, the Company capitalized certain construction administration costs of $1.6 million for the three month period ended March 31, 2006 and $6.2 million, $5.5 million, $5.1 million and $4.5 million for the years ended December 31, 2005, 2004, 2003 and 2002, 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 three months ended March 31, 2006
 
Reconciliation of Supplemental
Non-GAAP Financial Measures

(Dollars in thousands)
(Unaudited)
Table 1 — Developers Diversified Realty Corporation and the Company’s Joint Ventures Combined
Same Store Net Operating Income (NOI) represents shopping center assets owned in comparable periods, excluding those under development. NOI generally includes revenues and expenses for each comparable asset, but excludes straight-line rent, lease termination income and provisions for uncollectible accounts and/or recoveries thereof. Reconciliation of Same Store NOI to Total Revenues and Certain Expenses is as follows:
                         
    Three Month Period          
    March 31,          
    2006     2005          
Total Revenues DDR
  $ 202,526     $ 171,912          
Total Revenues DDR Combined Joint Ventures
    105,811       102,487          
Operating and Maintenance — DDR
    (25,914 )     (23,507 )        
Real Estate Taxes — DDR
    (23,124 )     (20,587 )        
Operating and Maintenance — DDR Combined Joint Ventures
    (36,136 )     (35,768 )        
 
                   
 
                       
Combined NOI
  $ 223,163     $ 194,537          
 
                   
 
                       
Total Same Store NOI
  $ 172,182     $ 168,390       2.3 %
Property NOI from other operating segments
    50,981       26,147          
 
                   
 
                       
Combined NOI
  $ 223,163     $ 194,537          
 
                   
Reconciliation of Supplemental Non-GAAP Financial Measures 2.5

 


 

Developers Diversified Realty
Quarterly Financial Supplement
For the three months ended March 31, 2006
 
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  
    Ended March 31,  
    2006     2005  
FUNDS FROM OPERATIONS:
               
Net Income Applicable to Common Shareholders
  $ 35,935     $ 91,758  
Depreciation and Amortization of Real Estate Investments
    45,032       40,842  
Equity in Net Income From Joint Ventures
    (5,469 )     (6,510 )
Joint Venture Funds From Operations
    9,940       11,315  
Minority Equity Interests (OP Units)
    534       729  
Loss (gain) on Sales of Real Estate
    220       (39,063 )
 
           
FUNDS FROM OPERATIONS AVAILABLE TO COMMON SHAREHOLDERS
  $ 86,192     $ 99,071  
 
           
 
               
Preferred dividend charges in accordance with EITF Topic No. D-42
    13,792       13,792  
 
           
ADJUSTED FUNDS FROM OPERATIONS AVAILABLE TO COMMON SHAREHOLDERS
  $ 99,984     $ 112,863  
 
           
Reconciliation of Supplemental Non-GAAP Financial Measures 2.5

 


 

Developers Diversified Realty
Quarterly Financial Supplement
For the three months ended March 31, 2006
 
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      
    Ended March 31,      
    2006     2005     Income Statement Caption
Transactional Income Included in FFO
                   
Consolidated
                   
Merchant Building Gains, Net
  $ 5,721     $ 23,638     Gain on Sales of Real Estate
Land Sale Gains
    1,724       1,958     Gain on Sales of Real Estate
 
               
 
  $ 7,445     $ 25,596      
 
               
Transactional Income NOT Included in FFO
                   
Consolidated
                   
(Loss) gain on Sales
  $ (220 )   $ 39,063     Gain on Sales of Real Estate
Gain on Sales from Discontinued Operations
              Gain on Sales of Discontinued Operations
 
               
 
  $ (220 )   $ 39,063     FFO Reconciliation
 
               
Gain on Sales of Real Estate
                   
Merchant Building Gains, Net
  $ 5,721     $ 23,638      
Land Sale Gains
    1,724       1,958      
(Loss) gain on Sales
    (220 )     39,063      
 
               
 
  $ 7,225     $ 64,659     Consolidated Income Statement
 
               
Gain on Sales of Real Estate From Discontinued Operations
                   
Gain on Sales from Discontinued Operations
  $     $     Consolidated Income Statement
 
               
Reconciliation of Supplemental Non-GAAP Financial Measures 2.5

 


 

Developers Diversified Realty
Quarterly Financial Supplement
For the three months ended March 31, 2006
 
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      
    Ended March 31,      
    2006     2005     Income Statement Caption
Transactional Income Included in FFO
                   
Joint Ventures
                   
Gain on Sales from Discontinued Operations
  $ 212     $ 974     Gain on Sales of Real Estate
Land Sales Gains
              Gain on Sales of Real Estate
 
               
 
  $ 212     $ 974      
 
               
DDR’s Proportionate Share
  $ 54     $ 240      
 
               
Transactional Income NOT Included in FFO
                   
Joint Ventures
                   
Gain on Sales from Discontinued Operations
  $     $ 27     Gain on Sales of Real Estate
Other Gains on Sales
    38       303     Gain on Sales of Real Estate
 
               
 
  $ 38     $ 330     FFO Reconciliation
 
               
DDR’s Proportionate Share
  $ 30     $ 309      
 
               
Gain on Sales of Real Estate
                   
Land Sales Gains
  $     $      
Other Gains on Sales
    38       303      
 
               
 
  $ 38     $ 303     Gain on Sales of Real Estate
 
               
Gain on Sales of Real Estate From Discontinued Operations
                   
Gain on Sales from Discontinued Operations Included in FFO
  $ 212     $ 974      
Gain on Sales from Discontinued Operations NOT Included in FFO
          27      
 
               
  $ 212     $ 1,001     Gain on Sales of Discontinued Operations
 
               
Reconciliation of Supplemental Non-GAAP Financial Measures 2.5

 


 

Developers Diversified Realty
Quarterly Financial Supplement
For the three months ended March 31, 2006
Summary of Wholly Owned and Consolidated Capital Transactions
Acquisitions, Dispositions, Developments & Expansions
for the Three Month Period Ended March 31, 2006
                                         
    Three Months                          
    Ended     Year Ended     Year Ended     Year Ended     Year Ended  
    March 31,     December 31,     December 31,     December 31,     December 31,  
    2006     2005     2004     2003     2002  
Acquisitions/Transfers
  $ 215.7 (1)   $ 1,610.8 (4)   $ 2,170.8 (7)   $ 1,363.6 (9)   $ 298.6 (11)
Completed Expansions
    6.1       41.6       25.2       26.8       8.0  
Developments & Construction in Progress
    48.7       246.1       203.8       104.6       66.4  
Tenant Improvements & Building Renovations
    5.2 (2)     7.5       6.6       6.3       7.3  
Furniture Fixtures & Equipment
    2.5       10.7 (5)     1.3       1.9       2.3  
 
                             
 
    278.2       1,916.7       2,407.7       1,503.2     $ 382.6  
Less: Real Estate Sales & Joint Venture Transfers
    (10.6 )(3)     (490.8 )(6)     (689.2 )(8)     (422.4 )(10)     ($72.2 )(12)
 
                             
 
Total DDR Net Additions (Millions)
  $ 267.6     $ 1,425.9     $ 1,718.5     $ 1,080.8     $ 310.4  
 
(1)   Includes transfer to DDR from joint venture of Salisbury, MD shopping center, aggregating $4.0 million, the final earn out from the Benderson acquisition aggregating $8.2 million, and consolidation of joint venture assets for a shopping center located in Phoenix, AZ aggregating $41.4 million pursuant to EITF 04 05.
 
(2)   The Company anticipates recurring capital expenditures, including tenant improvements, of approx. $12.0 million associated with its wholly owned and consolidated portfolio during 2006.
 
(3)   Includes the sale to Macquarie DDR Trust joint venture of two earnout parcels located at the Monaca, PA and Birmingham, AL shopping centers aggregating $6.7 million and the sale of several outparcels.
 
(4)   Includes the acquisition of the Caribbean Property Group portfolio and the Mervyn’s portfolio aggregating $1,160.1 million and $409.1 million, respectively, the 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.
 
(5)   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.
 
(6)   In addition to the asset sales which had an aggregate cost of $219.1 million, 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.
 
(7)   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.
 
(8)   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.
 
(9)   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.
 
(10)   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.
 
(11)   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.
 
(12)   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.
Summary of Wholly Owned Capital Transactions 3.1


 

Developers Diversified Realty
Quarterly Financial Supplement
For the three months ended March 31, 2006
Wholly Owned and Consolidated Acquisitions
for the Three Month Period Ended March 31, 2006
                             
                Cost   Acquisition    
Property Location   GLA   (1)   (Millions)   Date   Major Tenants
Pasadena, CA
    556,961         $ 151.0     01/13/06   Macy’s, Pacific Theatres, Gelson’s Market, DSW Show Warehouse, Loehmann’s, Equinox
 
                           
San Diego, CA (College)
    73,872         $ 11.1     01/31/06   Mervyn’s
 
                           
 
Total
    630,833         $ 162.1          
 
(1)   GLA may include property managed, but not owned.

There were no significant third party dispositions for the three month period
ended March 31, 2006.
Wholly Owned Acquisitions and Dispositions 3.2

 


 

Developers Diversified Realty
Quarterly Financial Supplement
For the three months ended March 31, 2006
Wholly Owned and Consolidated
Expansion and Redevelopment Projects
for the Three Month Period Ended March 31, 2006
     
Projects Completed    
 
Ocala, FL
  Recaptured the Winn Dixie and expanded the space by 6,000 sf for Hobby Lobby.
 
   
Rome, NY
  Expansion of the shopping center to accommodate a new Marshall’s (opened 3/06).
         
 
Total Net Cost (Millions)
  $ 6.1  
 
     
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.
 
   
Lakeland, FL
  Construction of a 77,557 sf Bealls Department Store.
 
   
Stockbridge, GA
  Redemised space to accommodate a Northern Tool (opened 10/05), Farmer’s Furniture (opened 3/06) and another junior anchor 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.
 
   
Olean, NY
  Relocate two tenants to accommodate Wal-Mart expansion to a Supercenter.
 
   
Mooresville, NC
  Construction of a Gander Mountain (scheduled to open 2nd quarter 2006) 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)
  $ 40.5  
 
     
Projects to Commence Construction
 
Birmingham, AL
  Construction of a 8,000 sf free standing outparcel and re-tenanting the former Winn Dixie building.
 
   
Hamilton, NJ
  Expansion of the shopping center to construct a 18,000 sf Old Navy and 4,500 sf Bombay Company.
 
   
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 three months ended March 31, 2006
Summary of Wholly Owned and Consolidated Development Projects
for the Three Month Period Ended March 31, 2006
                             
                    Substantial    
            Net Cost   Completion    
    GLA   (Millions)   Date   Major Tenants
Projects Substantially Completed
                           
 
Freehold, NJ
    500,000     $ 25.4 (2)   2005 & 2006   Wal-Mart (opened 3/06) and Sam’s Club (opened 4/06) and other retail tenants and outparcels to be announced
 
                           
Projects in Progress
                           
 
Miami, FL
    634,211     $ 125.6 (3)   2006 & 2007   Target, Linens N Things, Circuit City and additional retail space to be announced
 
                           
Nampa, ID
    858,396     $ 93.3 (4)     2007     To be announced
 
                           
McHenry, IL
    452,380 (1)   $ 58.9     2006 & 2007   Dick’s and other retail tenants to be announced
 
                           
Chesterfield, MI
    256,549 (1)   $ 12.7       2006     Wal-Mart and 25,400 sf of small shop retail and additional retail space to be announced
 
                           
Horseheads, NY
    699,163 (1)   $ 35.8 (5)     2007     Wal-Mart, Kohl’s and additional retail space to be announced
 
                           
Apex, NC (Beaver Creek
Crossings-Phase I)
    345,254     $ 56.9 (6)     2006     Consolidated Theaters (scheduled to open 2nd quarter 2006), Dick’s, Old Navy, Circuit City, and other retail tenants to be announced
 
                           
Pittsburgh, PA
    367,273 (1)   $ 15.3       2006     Target (opened 3/06), Sportsmans Warehouse (opened 11/05), Sam’s Club (scheduled to open 2nd quarter 2006), PNC Bank and Hallmark (opened 3/06) and other retail tenants and restaurants to be announced
 
                           
San Antonio, TX (Stone Oak)
    665,229 (1)   $ 82.2 (7)     2007     Target, Office Max, Hobby Lobby, DSW, Ann Taylor, and other tenants to be announced
 
                           
Projects to Commence Construction
                           
 
Homestead, FL
    399,711 (1)   $ 52.0       2007     To be announced
 
                           
Norwood, MA
    95,242     $ 24.5       2007     To be announced
 
                           
Seabrook, NH
    398,805 (1)   $ 36.3 (8)     2007     To be announced
 
                           
McKinney, TX (Phase II)
    87,757     $ 7.3       2007     To be announced
 
                           
 
Wholly Owned Development Totals
    5,759,970     $ 626.2              
 
(1)   Includes square footage not owned by the company.
 
(2)   Net Project Cost decrease from 4th quarter 2005 due to the replacement of two ground leases with two outparcel sales.
 
(3)   Net Project Cost increase from 4th quarter 2005 due to the replacement of an anchor ground lease with a mix of build to suit retail tenants.
 
(4)   Net Project Cost increase from 4th quarter 2005 due to projected GLA increase by approximately 180,000 sf.
 
(5)   Net Project Cost decrease from 4th quarter 2005 due to the replacement of a build to suit retail space with a ground lease that includes sitework reimbursements.
 
(6)   The asset is being developed with First Carolina Properties who has a 20% minority interest.
 
(7)   The asset is being developed with David Berndt Interest who has a 50% ownership interest. Net Project Cost increase from 4th quarter 2005 due to elimination of an outparcel sale and slight increase in GLA.
 
(8)   Net Project Cost decreased from 4th quarter 2005 due to the replacement of a build to suit retail space with a ground lease.
Wholly Owned Developments 3.2

 


 

Developers Diversified Realty
Quarterly Financial Supplement
For the three months ended March 31, 2006
Wholly Owned and Consolidated Development
Assets Placed in Service as of March 31, 2006
         
    Assets Placed  
    in Service  
Date   (Millions)  
 
As of December 31, 2005
  $ 18.4  
1st Quarter 2006
  $ 4.1  
2nd Quarter 2006
  $ 11.2  
3rd Quarter 2006
  $ 14.4  
4th Quarter 2006
  $ 78.7  
Thereafter
  $ 499.4  
 
Total
  $ 626.2  
 
Wholly Owned and Consolidated Development
Funding Schedule as of March 31, 2006
         
Funded as of March 31, 2006
  $ 294.5  
Projected Net Funding During 2006
  $ 161.3  
Projected Net Funding Thereafter
  $ 170.4  
 
Total
  $ 626.2  
 
Wholly Owned Development Delivery and Funding Schedules 3.2

 


 

Developers Diversified Realty Corporation
Quarterly Financial Supplement
For the three months ended March 31, 2006
Summary of Consolidated Debt
as of March 31, 2006
                                 
            Mortgage     Maturity     Interest  
            Balance(000's)     Date     Rate (1)  
SENIOR DEBT:
                               
Unsecured Credit Facilities:
                               
$200 Million Term Loan
          $ 200,000       05/07       5.440  
$1 Billion Revolving Credit Facility
            150,000       05/08       4.980  
$60 Million Revolving Credit Facility
            0       05/08     NA
Secured Credit Facility:
                               
$400 Million Term Loan
            400,000 (2)     06/08       5.799  
 
                             
Total Term and Credit Facility Debt
            750,000                  
 
                               
PUBLIC DEBT:
                               
Medium Term Notes
    F       98,796 (3)     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       99,953       01/08       6.625  
Medium Term Notes
    F       274,352       01/09       3.875  
Medium Term Notes
    F       199,683       05/10       5.000  
Medium Term Notes
    F       299,708       07/10       4.625  
Medium Term Notes
    F       249,233       04/11       5.250  
Medium Term Notes
    F       348,430       10/12       5.375  
Medium Term Notes
    F       199,350       05/15       5.500  
Medium Term Notes
    F       100,000       07/18       7.500  
 
                             
Total Public Debt
            1,966,505                  
 
                               
MORTGAGE DEBT:
                               
Silver Springs, MD (Tech 29-2)
    F       3,352       09/06       9.050  
Dublin, OH
    F       9,114       09/06       8.375  
Pickerington, OH
    F       4,022       12/06       8.250  
Hamilton, NJ
    V       65,000       05/07       5.629  
Sault St. Marie, MI
    F       1,236       05/07       8.375  
Phoenix, AZ (Paradise Valley)
    F       16,978 (4)     05/07       7.780  
St. Louis, MO (Olympic)
    F       3,105       08/07       9.150  
Berlin, VT
    F       4,940       08/07       9.750  
Mt. Laurel, NJ
    V       46,354       09/07       5.729  
Apex, NC
    V       15,573       10/07       5.829  
DDR MDT MV, LLC
    V       45,923 (5)     10/07       5.549  
Tupelo, MS
    F       11,390       03/08       4.410  
Jacksonville, FL
    F       6,535       03/08       4.410  
Solon, OH
    F       15,778       03/08       4.410  
N. Charleston, SC
    F       11,297       03/08       4.410  
Walker, MI
    F       8,309       03/08       4.410  
Mt. Pleasant, SC (GS II)
    F       7,656       03/08       4.410  
Meridian, ID (GS II)
    F       24,741       03/08       4.410  
Birmingham, AL (GS II)
    F       26,795       03/08       4.410  
Summary of Consolidated Debt 3.3

 


 

Developers Diversified Realty Corporation
Quarterly Financial Supplement
For the three months ended March 31, 2006
Summary of Consolidated Debt
as of March 31, 2006 (con’t)
                                 
            Mortgage     Maturity     Interest  
            Balance(000's)     Date     Rate (1)  
Wilmington, NC (GS II)
    F     $ 20,540       03/08       4.410  
Durham, NC (GS II)
    F       7,002       03/08       4.410  
Stone Oak, TX
    V       5,000 (6)     02/09       6.079  
Silver Springs, MD (Tech 29-1)
    F       6,679       02/09       7.330  
Leawood, KS
    F       50,026       07/09       7.310  
Martinsville, VA
    F       19,597       12/09       8.460  
St. Louis, MO (Keller)
    F       1,284       01/10       8.625  
DDR MDT MV, LLC
    F       212,550 (5)     10/10       5.211  
Big Flats, NY (Big Flats I)
    F       9,756       12/10       8.011  
Plattsburgh, NY
    F       9,525       12/10       8.000  
Erie, PA
    F       25,244       04/11       6.884  
Erie, PA
    F       2,914       04/11       6.884  
Boardman, OH
    F       26,217       04/11       6.884  
St. Louis, MO (Sunset)
    F       33,986       04/11       6.884  
St. Louis, MO (Brentwood)
    F       25,244       04/11       6.884  
Denver, CO (Centennial)
    F       37,868       04/11       6.884  
Gates, NY (Westgate)
    F       24,677       10/11       7.240  
Indian Train, NC (Union TC Ph I)
    F       6,896       10/11       7.000  
Ashtabula, OH
    F       6,865       12/11       7.000  
West Pasco, FL
    F       4,784       02/12       9.625  
Denver, CO (Univ Hills)
    F       28,225       06/12       7.300  
St. Louis, MO (Gravois)
    F       1,435       07/12       8.625  
N. Charleston, SC
    F       10,602       07/12       7.370  
Mooresville, NC
    F       23,696       12/12       6.930  
Big Flats, NY (Big Flats IV)
    F       1,011       01/13       7.600  
Big Flats, NY (Big Flats II & III)
    F       4,293       01/13       8.010  
Buffalo, NY (Delaware Commons)
    F       1,094       01/13       6.960  
Jamestown, NY (Southside Plaza)
    F       1,579       04/13       7.590  
Victor, NY (Victor Square)
    F       6,574       04/13       5.800  
Mays Landing, NJ (Wrangleboro)
    F       49,711       05/13       6.990  
Beachwood, OH
    F       3,456       07/13       7.640  
W. Long Branch, NJ (Monmouth)
    F       13,790       07/13       8.570  
Boynton Beach, FL (Meadows Square)
    F       4,285       07/13       6.720  
Englewood, FL (Rotonda)
    F       2,007       07/13       5.800  
Reno, NV
    V       3,525       02/15       9.000  
Olean, NY
    F       4,657       07/15       8.995  
Mays Landing, NJ (Hamilton)
    F       15,037       09/15       4.700  
Columbus, OH (Consumer II West)
    F       13,841       11/15       10.188  
Amherst, NY (Kmart/Blvd Cons. II)
    F       12,291       11/15       7.850  
Lockport, NY (Walmart/Tops)
    F       12,750       01/16       8.000  
Merriam, KS (TIF)
    F       7,075       02/16       6.900  
Rome, NY (Freedom)
    F       4,387       09/16       7.850  
Medina, NY
    F       3,816       11/16       7.660  
Bellefontaine, OH
    F       2,314       12/16       7.500  
Summary of Consolidated Debt 3.3

 


 

Developers Diversified Realty Corporation
Quarterly Financial Supplement
For the three months ended March 31, 2006
Summary of Consolidated Debt
as of March 31, 2006 (con’t)
                                 
            Mortgage     Maturity     Interest  
            Balance(000's)     Date     Rate (1)  
Amherst, NY (Tops Transit + French)
    F     $ 5,149       12/16       7.680  
Canandaigua, NY
    F       5,645       01/17       6.150  
Cheektowaga, NY (Walmart Thruway)
    F       4,903       10/17       6.780  
Ithaca, NY
    F       19,067       01/18       7.050  
Amherst, NY (Target/Blvd Cons. II)
    F       13,436       07/18       5.670  
Springville, NY
    F       6,101       07/18       6.375  
Niskayuna, NY (Mohawk)
    F       24,723       12/18       5.750  
Henderson, TN
    F       8,873       01/19       7.660  
Spring Hill, FL
    F       5,097       09/19       9.750  
Alden, NY
    F       4,377       10/19       8.100  
Cedar Rapids, IA
    F       9,668       01/20       9.375  
Riverdale, UT (North)
    F       8,650       10/20       9.300  
Plainville, CT
    F       7,100       04/21       7.125  
Allentown, PA
    F       17,881       06/21       6.950  
Princeton, NJ
    F       25,598       03/27       8.262  
Bayamon, PR (Rio Hondo)
    F       56,500       05/28       7.180  
San Juan, PR (Senorial Plaza)
    F       14,672       05/28       7.180  
Bayamon, PR (Rexville Plaza)
    F       8,839       05/28       7.180  
Arecibo, PR (Atlantico)
    F       14,763       05/28       7.180  
Total Mortgage Debt
            1,357,241                  
 
                             
Total Debt
          $ 4,073,746                  
Adjustment for Reverse Swap
            6 (7)                
 
                             
 
          $ 4,073,752                  
 
                             
Weighted Average — Total
                  5.02 years     5.7 %
 
                             
Weighted Average — Fixed
          $ 3,282,372     5.82 years     5.7 %
 
                             
Weighted Average — Floating
          $ 791,374     1.72 years     5.5 %
 
                             
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 2006 deferred finance cost amortization of approximately $7.3 million, net is offset by approximately $9.2 million of annualized fair market value adjustment in 2006.
2.   Secured term loan debt of $200 million has been converted to a fixed rate of 5.99% until June 28, 2010. The interest rate on the term loan of 5.80% is the weighted average rate of all traunches as of March 31, 2006, and reflects the fixed swap rate on $200 million.
3.   Public debt of $60 million has been converted to a variable rate of 6.345%. The remaining balance of $38.8 million is at the stated fixed rate.
4.   The company’s 67% joint venture with Shea and Tatum Associates is consolidated within DDR’s accounts pursuant to EITF 04-05.
5.   The company’s 50% joint venture with DDR Macquarie is consolidated within DDR’s accounts pursuant to FIN 46.
6.   The company’s 50% joint venture with David Berndt Interests is consolidated within DDR’s accounts pursuant to FIN 46.
7.   Offset included in other assets.
Summary of Consolidated Debt 3.3

 


 

Developers Diversified Realty Corporation
Quarterly Financial Supplement
For the three months ended March 31, 2006
Summary of Consolidated Mortgage Principal Payments
and Corporate Debt Maturities
as of March 31, 2006
(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  
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  
Phoenix, AZ
    323       16,733                                                                               17,056  
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 three months ended March 31, 2006
Summary of Consolidated Mortgage Principal Payments
and Corporate Debt Maturities
as of March 31, 2006 (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  
Payments Made Through 3/31/06
    -9,221                                                                                       -9,221  
 
                                                                                               
Total — Property Mortgages
    40,146       169,042       164,825       103,202       246,274       205,669       67,162       83,796       22,966       33,541       153,691       1,290,315  
Summary of Consolidated Mortgage Principal Payments Corporate Debt Maturities 3.4

 


 

Developers Diversified Realty Corporation
Quarterly Financial Supplement
For the three months ended March 31, 2006
Summary of Consolidated Mortgage Principal Payments
and Corporate Debt Maturities
as of March 31, 2006 (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
                                                                                               
$68 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
    0       61,926       0       5,000       0       0       0       0       0       0       0       66,926  
 
                                                                                               
DEBT OFFERINGS
                                                                                               
Senior Notes
            110,796       99,953       274,352       499,392       249,233       348,430                       199,350       100,000       1,881,506  
Unsecured Notes
            85,000                                                                               85,000  
 
                                                                                               
Total — Debt Offerings
    0       195,796       99,953       274,352       499,392       249,233       348,430       0       0       199,350       100,000       1,966,505  
 
                                                                                               
Total — Property Mortgages,
    40,146       426,765       264,778       382,554       745,666       454,902       415,592       83,796       22,966       232,891       253,691       3,323,746  
Construction Loans & Debt Offerings
                                                                                               
 
                                                                                               
REVOLVING CREDIT FACILITIES & TERM LOANS
                                                                                               
$1 Billion Unsecured Credit
                    150,000 (1)                                                                     150,000  
(JPMorgan Chase)
                                                                                               
$400 Million Secured Term
                    400,000 (1)                                                                     400,000  
(Key Bank)
                                                                                               
$200 Million Unsecured Term
            200,000 (1)                                                                             200,000  
(JPMorgan Chase)
                                                                                               
$60 Million Unsecured Credit
                    0 (1)                                                                     0  
(National City Bank)
                                                                                               
 
                                                                                               
Total — Debt
  $ 40,146     $ 626,765     $ 814,778     $ 382,554     $ 745,666     $ 454,902     $ 415,592     $ 83,796     $ 22,966     $ 232,891     $ 253,691     $ 4,073,746  
 
                                                                                               
Notes:
(1)   Balance at March 31, 2006 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 three months ended March 31, 2006
Joint Ventures (Combining Financial Information) (1)
(in millions)
Combining Balance Sheets
as of March 31, 2006
                                                         
            RVIP III B                     RVIP VIII             Community  
    RVIP III (3)     Deer Park, IL     RVIP VI     RVIP VII     Tech Ridge LLC     DPG     Centers Five  
Real Estate Assets
  $ 0.8     $ 84.0     $ 32.5     $ 124.4     $ 33.8     $ 129.3     $ 266.2  
Accumulated Depreciation
    0.0       (10.1 )     (5.0 )     (14.8 )     (2.0 )     (4.5 )     (42.0 )
 
                                         
Real Estate, net
    0.8       73.9       27.5       109.6       31.8       124.8       224.2  
 
                                         
Receivables, Net
    0.4       1.0       0.3       2.3       0.7       1.1       5.9  
Other assets
    0.7       1.4       1.7       6.4       1.4       1.7       8.2  
Disproportionate Share of Equity
                                         
 
                                         
 
  $ 1.9     $ 76.3     $ 29.5     $ 118.3     $ 33.9     $ 127.6     $ 238.3  
 
                                         
Mortgage Debt
  $ 0.0     $ 56.5     $ 18.0     $ 74.1     $ 23.4     $ 11.2     $ 298.0  
Amounts payable to DDRC
    0.0       0.0       0.0       0.0       0.0       0.0       0.0  
Other liabilities
    0.4       3.5       0.8       15.6       0.8       2.1       3.3  
 
                                         
 
    0.4       60.0       18.8       89.7       24.2       13.3       301.3  
Accumulated equity (deficit)
    1.5       16.3       10.7       28.6       9.7       114.3       (63.0 )
Disproportionate Share of Equity
                                         
 
                                         
 
  $ 1.9     $ 76.3     $ 29.5     $ 118.3     $ 33.9     $ 127.6     $ 238.3  
 
                                         
Proportionate share of other assets/liabilities, net
  $ 0.2     ($  0.3 )   $ 0.3     ($  1.4 )   $ 0.3     $ 0.1     $ 5.4  
 
                                         
Disproportionate amount payable to DDR
  $ 0.0     $ 0.0     $ 0.0     $ 0.0     $ 0.0     $ 0.0     $ 0.0  
 
                                         
Combining Statements of Operations
for the period ended March 31, 2006
                                                         
            RVIP III B                     RVIP VIII             Community  
    RVIP III (3)     Deer Park, IL     RVIP VI     RVIP VII     Tech Ridge LLC     DPG     Centers Five  
Revenues from operations
  $ 0.0     $ 3.1     $ 1.1     $ 3.5     $ 1.4     $ 3.2     $ 9.1  
Rental operation expenses
    0.0       (1.1 )     (0.5 )     (1.0 )     (0.6 )     (0.9 )     (2.7 )
 
                                         
Net operating income
    0.0       2.0       0.6       2.5       0.8       2.3       6.4  
Depreciation and amortization expense
    0.0       (0.6 )     (0.2 )     (0.7 )     (0.2 )     (0.8 )     (1.6 )
Interest expense
    0.0       (0.9 )     (0.3 )     (1.4 )     (0.3 )     (0.1 )     (4.2 )
 
                                         
Income (loss) before gain on sale
    0.0       0.5       0.1       0.4       0.3       1.4       0.6  
Gain (loss) on sale of real estate
    0.0       0.0       0.0       0.0       0.0       0.0       0.0  
Discontinued operations
    (0.0 )     0.0       0.0       0.4       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  
Disproportionate Share of Income
                                         
 
                                         
Net income (loss)
  $ 0.0     $ 0.5     $ 0.1     $ 0.8     $ 0.3     $ 1.4     $ 0.6  
DDR Ownership interest
    ***       ***       ***       ***       ***       10 %     50 %
 
                                         
 
  ($  0.0 )   $ 0.2     $ 0.0     $ 0.2     $ 0.1     $ 0.1     $ 0.3  
Amortization of basis differential
    0.0       0.0       0.1       0.0       0.0       0.0       0.0  
 
                                         
 
  $ 0.0     $ 0.2     $ 0.1     $ 0.2     $ 0.1     $ 0.1     $ 0.3  
 
                                         
Proportionate share of net operating income (6)
  $ 0.0     $ 0.5     $ 0.2     $ 0.5     $ 0.2     $ 0.2     $ 3.2  
 
                                         
Proportionate share of interest expense (6)
  $ 0.0     $ 0.2     $ 0.1     $ 0.3     $ 0.1     $ 0.0     $ 2.1  
 
                                         
Funds From Operations (“FFO”):
                                                       
Net income (loss)
  ($  0.0 )   $ 0.5     $ 0.1     $ 0.8     $ 0.3     $ 1.4     $ 0.6  
Depreciation of real property
    0.0       0.6       0.2       0.7       0.2       0.8       1.6  
(Gain) loss on sale
    0.0       0.0       0.0       0.0       0.0       0.0       0.0  
Disproportionate Share of Income
                                         
 
                                         
 
  $ 0.0     $ 1.1     $ 0.3     $ 1.5     $ 0.5     $ 2.2     $ 2.2  
DDR ownership interest
    ***       ***       ***       ***       ***       10 %     50 %
 
                                         
DDR FFO
  ($  0.0 )   $ 0.4     $ 0.1     $ 0.5     $ 0.2     $ 0.2     $ 1.1  
 
                                         
Joint Venture Financials 4.1

 


 

Developers Diversified Realty
Quarterly Financial Supplement
For the three months ended March 31, 2006
Joint Ventures (Combining Financial Information) (1)
(in millions)
Combining Balance Sheets
as of March 31, 2006
                                                                 
    Community             Lennox Town     Sun Center     Dublin             Littleton,     Service  
    Centers Eight     Kildeer, IL     Center (2)     Limited (2)     Village (3)     DOTRS     CO (3)     Merchandise (4)  
Real Estate Assets
  $ 26.7     $ 31.0     $ 21.0     $ 25.9     $ 0.1     $ 25.5     $ 3.1     $ 129.0  
Accumulated Depreciation
    (2.9 )     (2.4 )     (4.0 )     (6.6 )     0.0       (4.6 )     0.0       (9.5 )
 
                                               
Real Estate, net
    23.8       28.6       17.0       19.3       0.1       20.9       3.1       119.5  
 
                                               
Receivables, Net
    0.6       0.5       1.6       0.8       0.0       0.8       0.0       16.5  
Other assets
    0.8       0.5       0.5       0.9       0.0       0.3       0.2       39.6  
Disproportionate Share of Equity
                                               
 
                                               
 
  $ 25.2     $ 29.6     $ 19.1     $ 21.0     $ 0.1     $ 22.0     $ 3.3     $ 175.6  
 
                                               
Mortgage Debt
  $ 17.3     $ 19.5     $ 18.0     $ 20.5     $ 0.0     $ 10.2     $ 0.0     $ 28.9  
Amounts payable to DDRC
    0.0       0.0       0.0       0.0       0.0       0.0       0.0       90.7  
Other liabilities
    0.7       0.7       0.8       0.6       0.0       0.4       0.2       16.7  
 
                                               
 
    18.0       20.2       18.8       21.1       0.0       10.6       0.2       136.3  
Accumulated equity (deficit)
    7.2       9.4       0.3       (0.1 )     0.1       11.4       3.1       39.3  
Disproportionate Share of Equity
                                               
 
                                               
 
  $ 25.2     $ 29.6     $ 19.1     $ 21.0     $ 0.1     $ 22.0     $ 3.3     $ 175.6  
 
                                               
Proportionate share of other assets/liabilities, net
  $ 0.4     $ 0.0     $ 0.6     $ 0.9     ($  0.0 )   $ 0.4     $ 0.0     $ 9.7  
 
                                               
Disproportionate amount payable to DDR
  $ 0.0     $ 0.0     $ 0.0     $ 0.0     $ 0.0     $ 0.0     $ 0.0     $ 68.3  
 
                                               
Combining Statements of Operations
for the period ended March 31, 2006
                                                                 
    Community             Lennox Town     Sun Center     Dublin             Littleton,     Service  
    Centers Eight     Kildeer, IL     Center (2)     Limited (2)     Village (3)     DOTRS     CO (3)     Merchandise (4)  
Revenues from operations
  $ 1.1     $ 1.0     $ 1.2     $ 1.2     $ 0.0     $ 1.0     $ 0.0     $ 6.1  
Rental operation expenses
    (0.4 )     (0.2 )     (0.3 )     (0.3 )     (0.0 )     (0.3 )     (0.0 )     (2.9 )
 
                                               
Net operating income
    0.7       0.8       0.9       0.9       0.0       0.7       (0.0 )     3.2  
Depreciation and amortization expense
    (0.1 )     (0.2 )     (0.1 )     (0.2 )     0.0       (0.2 )     0.0       (1.9 )
Interest expense
    (0.3 )     (0.3 )     (0.4 )     (0.4 )     0.0       (0.1 )     0.0       (2.6 )
 
                                               
Income (loss) before gain on sale
    0.3       0.3       0.4       0.3       0.0       0.4       (0.0 )     (1.3 )
Gain (loss) on sale of real estate
    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       (0.1 )
Gain on sale of discontinued operations
    0.0       0.0       0.0       0.0       0.0       0.0       0.0       0.2  
Disproportionate Share of Income
                                               
 
                                               
Net income (loss)
  $ 0.3     $ 0.3     $ 0.4     $ 0.3     $ 0.0     $ 0.4     ($  0.0 )   ($  1.2 )
DDR Ownership interest
    50 %     10 %     ***       ***       63 %     50 %     50 %     ***  
 
                                               
 
  $ 0.1     $ 0.0     $ 0.2     $ 0.3     ($  0.0 )   $ 0.2     ($  0.0 )   ($  0.3 )
Amortization of basis differential
    0.0       0.0       0.0       0.0       0.0       0.0       0.0       0.0  
 
                                               
 
  $ 0.1     $ 0.0     $ 0.2     $ 0.3     $ 0.0     $ 0.2     $ 0.0     ($  0.3 )
 
                                               
Proportionate share of net operating income (6)
  $ 0.4     $ 0.1     $ 0.4     $ 0.7     ($  0.0 )   $ 0.4     ($  0.0 )   $ 0.8  
 
                                               
Proportionate share of interest expense (6)
  $ 0.2     $ 0.0     $ 0.2     $ 0.3     $ 0.0     $ 0.1     $ 0.0     $ 0.7  
 
                                               
Funds From Operations (“FFO”):
                                                               
Net income (loss)
  $ 0.3     $ 0.3     $ 0.4     $ 0.3     ($  0.0 )   $ 0.4     ($  0.0 )   ($  1.2 )
Depreciation of real property
    0.1       0.2       0.1       0.2       0.0       0.2       0.0       1.9  
(Gain) loss on sale
    0.0       0.0       0.0       0.0       0.0       0.0       0.0       0.0  
Disproportionate Share of Income
                                               
 
                                               
 
  $ 0.4     $ 0.5     $ 0.5     $ 0.5     $ 0.0     $ 0.6     ($  0.0 )   $ 0.7  
DDR ownership interest
    50 %     10 %     ***       ***       63 %     50 %     50 %     25 %
 
                                               
DDR FFO
  $ 0.2     $ 0.1     $ 0.2     $ 0.4     ($  0.0 )   $ 0.3     ($  0.0 )   $ 0.2  
 
                                               
Joint Venture Financials 4.1
 


 

     
Developers Diversified Realty
Quarterly Financial Supplement
For the three months ended March 31, 2006
Joint Ventures (Combining Financial Information) (1)
(in millions)
Combining Balance Sheets
as of March 31, 2006
                                                                 
    Jefferson             Sansone Group /                     Coventry II DDR     Coventry II DDR     Coventry II DDR  
    County, MO     Apex IV (3)     DDRC LLC     DDR Markaz     DDR Markaz II     Ward Parkway     Totem Lakes     Phoenix Spectrum  
Real Estate Assets
  $ 6.6     $ 14.6     $ 0.5     $ 167.4     $ 202.4     $ 59.5     $ 39.4     $ 64.8  
Accumulated Depreciation
    (0.5 )     0.0       (0.3 )     (11.4 )     (7.5 )     (2.6 )     (1.4 )     (2.4 )
 
                                               
Real Estate, net
    6.1       14.6       0.2       156.0       194.9       56.9       38.0       62.4  
 
                                               
Receivables, Net
    0.0       0.0       1.4       2.0       1.4       2.2       0.2       1.2  
Other assets
    0.5       0.2       2.6       5.2       6.3       1.1       0.6       2.4  
Disproportionate Share of Equity
                                               
 
                                               
 
  $ 6.6     $ 14.8     $ 4.2     $ 163.2     $ 202.6     $ 60.2     $ 38.8     $ 66.0  
 
                                               
Mortgage Debt
  $ 3.7     $ 0.0     $ 0.0     $ 110.0     $ 150.5     $ 31.5     $ 26.0     $ 40.0  
Amounts payable to DDRC
    3.1       11.2       0.0       0.7       0.3       0.0       0.0       0.0  
Other liabilities
    0.2       1.6       0.9       1.7       (0.3 )     1.2       0.5       2.6  
 
                                               
 
    7.0       12.8       0.9       112.4       150.5       32.7       26.5       42.6  
Accumulated equity (deficit)
    (0.4 )     2.0       3.3       50.8       52.1       27.5       12.3       23.4  
Disproportionate Share of Equity
                                               
 
                                               
 
  $ 6.6     $ 14.8     $ 4.2     $ 163.2     $ 202.6     $ 60.2     $ 38.8     $ 66.0  
 
                                               
Proportionate share of other assets/liabilities, net
  $ 0.1     ($  0.3 )   $ 1.5     $ 1.1     $ 1.6     $ 0.4     $ 0.1     $ 0.2  
 
                                               
Disproportionate amount payable to DDR
  $ 1.5     $ 8.9     $ 0.0     $ 0.1     $ 0.0     $ 0.0     $ 0.0     $ 0.0  
 
                                               
Combining Statements of Operations
for the period ended March 31, 2006
                                                                 
    Jefferson             Sansone Group /                     Coventry II DDR     Coventry II DDR     Coventry II DDR  
    County, MO     Apex IV (3)     DDRC LLC     DDR Markaz     DDR Markaz II     Ward Parkway     Totem Lakes     Phoenix Spectrum  
Revenues from operations
  $ 0.2     $ 0.0     $ 3.4     $ 5.4     $ 5.4     $ 2.1     $ 0.9     $ 1.9  
Rental operation expenses
    (0.1 )     0.0       (2.7 )     (1.8 )     (1.9 )     (1.0 )     (0.3 )     (1.1 )
 
                                               
Net operating income
    0.1       0.0       0.7       3.6       3.5       1.1       0.6       0.8  
Depreciation and amortization expense
    (0.1 )     0.0       (0.2 )     (1.1 )     (1.4 )     (0.3 )     (0.2 )     (0.3 )
Interest expense
    (0.1 )     0.0       0.0       (1.2 )     (2.0 )     (0.6 )     (0.4 )     (0.5 )
 
                                               
Income (loss) before gain on sale
    (0.1 )     0.0       0.5       1.3       0.1       0.2       0.0       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  
Discontinued operations
    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  
Disproportionate Share of Income
                                               
 
                                               
Net income (loss)
  ($  0.1 )   $ 0.0     $ 0.5     $ 1.3     $ 0.1     $ 0.2     $ 0.0     $ 0.0  
DDR Ownership interest
    50 %     20 %     ***       20 %     20 %     20 %     20 %     20 %
 
                                               
 
  ($  0.0 )   $ 0.0     $ 0.3     $ 0.3     $ 0.0     $ 0.1     $ 0.0     $ 0.0  
Amortization of basis differential
    0.0       0.0       0.1       0.0       0.0       0.0       0.0       0.0  
 
                                               
 
  ($  0.0 )   $ 0.0     $ 0.4     $ 0.3     $ 0.0     $ 0.1     $ 0.0     $ 0.0  
 
                                               
Proportionate share of net operating income (6)
  $ 0.1     $ 0.0     $ 0.3     $ 0.7     $ 0.7     $ 0.2     $ 0.1     $ 0.2  
 
                                               
Proportionate share of interest expense (6)
  $ 0.1     $ 0.0     $ 0.0     $ 0.2     $ 0.4     $ 0.1     $ 0.1     $ 0.1  
 
                                               
Funds From Operations (“FFO”):
                                                               
Net income (loss)
  ($  0.1 )   $ 0.0     $ 0.5     $ 1.3     $ 0.1       0.2       (0.0 )     0.0  
Depreciation of real property
    0.1       0.0       0.2       1.1       1.4       0.3       0.2       0.3  
(Gain) loss on sale
    0.0       0.0       0.0       0.0       0.0       0.0       0.0       0.0  
Disproportionate Share of Income
    (0 )                                          
 
                                               
 
  $ 0.0     $ 0.0     $ 0.7     $ 2.4     $ 1.5     $ 0.5     $ 0.2     $ 0.3  
DDR ownership interest
    50 %     20 %     ***       20 %     ***       20 %     20 %     20 %
 
                                               
DDR FFO
  ($  0.0 )   $ 0.0     $ 0.3     $ 0.5     $ 0.4     $ 0.1     $ 0.0     $ 0.1  
 
                                               
Joint Venture Financials 4.1

 


 

     
Developers Diversified Realty
Quarterly Financial Supplement
For the three months ended March 31, 2006
Joint Ventures (Combining Financial Information) (1)
(in millions)
Combining Balance Sheets
as of March 31, 2006
                                                                 
                                                            DDRs  
    Coventry II DDR     Coventry II DDR     Coventry II DDR     DDR/Macquarie     DDR/Macquarie     Sold/Acquired             Proportionate  
    Westover     Buena Park     Merriam, KS     Fund LLC     Management LLC     JVs (5)     Total     Share  
Real Estate Assets
  $ 24.3     $ 93.4     $ 18.8     $ 1,725.3     $ 0.0     $ 0.0     $ 3,350.3     $ 694.4  
Accumulated Depreciation
    (0.2 )     (2.3 )     0.0       (61.7 )     0.0       0.0       (198.5 )     (57.3 )
 
                                               
Real Estate, net
    24.1       91.1       18.8       1,663.6       0.0       0.0       3,151.8       637.1  
 
                                               
Receivables, Net
    0.3       0.8       0.0       25.9       0.0       0.5       68.4       16.7  
Other assets
    1.0       1.8       0.7       32.6       6.4       1.3       126.9       32.4  
Disproportionate Share of Equity
                                  0.0             4.8 (7)
 
                                               
 
  $ 25.4     $ 93.7     $ 19.5     $ 1,722.1     $ 6.4     $ 1.8     $ 3,347.1     $ 691.0  
 
                                               
Mortgage Debt
  $ 17.3     $ 61.0     $ 18.2     $ 1,028.6     $ 0.0     $ 0.0     $ 2,082.4     $ 480.3  
Amounts payable to DDRC
    0.0       0.0       0.0       1.8       0.0       0.0       107.7       26.6  
Other liabilities
    0.2       2.7       0.3       14.2       0.2       1.0       73.9       17.8  
 
                                               
 
    17.5       63.7       18.5       1,044.6       0.2       1.0       2,264.0       524.7  
Accumulated equity (deficit)
    7.9       30.0       1.0       677.5       6.2       0.8       1,083.1       161.5  
Disproportionate Share of Equity
                                              4.8 (7)
 
                                               
 
  $ 25.4     $ 93.7     $ 19.5     $ 1,722.1     $ 6.4     $ 1.8     $ 3,347.1     $ 691.0  
 
                                               
Proportionate share of other assets/liabilities, net
  $ 0.1     ($  0.0 )   $ 0.1     $ 6.4     $ 2.9     $ 0.4     $ 31.2          
 
                                                 
Disproportionate amount payable to DDR
  $ 0.0     $ 0.0     $ 0.0     $ 0.0     $ 0.0     $ 0.0     $ 78.8          
 
                                                 
Combining Statements of Operations for the period ended March 31, 2006
                                                                 
                                                            DDRs  
    Coventry II DDR     Coventry II DDR     Coventry II DDR     DDR/Macquarie     DDR/Macquarie     Sold/Acquired             Proportionate  
    Westover     Buena Park     Merriam, KS     Fund LLC     Management LLC     JVs (5)     Total     Share  
Revenues from operations
  $ 0.6     $ 3.1     $ 0.0     $ 47.5     $ 0.3     $ 2.2     $ 105.9     $ 24.4  
Rental operation expenses
    (0.2 )     (1.3 )     (0.0 )     (14.3 )     (0.2 )     (0.2 )     (36.2 )     (8.7 )
 
                                               
Net operating income
    0.4       1.8       (0.0 )     33.2       0.1       2.0       69.7       15.7  
Depreciation and amortization expense
    (0.1 )     (0.4 )     0.0       (9.1 )     (0.3 )     (0.0 )     (20.2 )     (4.4 )
Interest expense
    (0.2 )     (1.0 )     0.0       (11.5 )     0.0       (0.2 )     (29.0 )     (7.1 )
 
                                               
Income (loss) before gain on sale
    0.1       0.4       (0.0 )     12.6       (0.2 )     1.8       20.5       4.2  
Gain (loss) on sale of real estate
    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       0.3       0.1  
Gain on sale of discontinued operations
    0.0       0.0       0.0       0.0       0.0       0.0       0.2       0.0  
Disproportionate Share of Income
                                              1.0 (8)
 
                                               
Net income (loss)
  $ 0.1     $ 0.4     $ 0.0     $ 12.6     ($  0.2 )   $ 1.8     $ 21.0     $ 5.3  
DDR Ownership interest
    20 %     20 %     20 %     ***       ***       ***                  
 
                                               
 
  $ 0.0     $ 0.1     ($  0.0 )   $ 2.6     ($  0.0 )   $ 0.5     $ 5.3     $ 5.3  
Amortization of basis differential
    0.0       0.0       0.0       0.0       (0.3 )     0.0       0.1     0.1
 
                                               
 
  $ 0.0     $ 0.1     $ 0.0     $ 2.6       (0.3 )   $ 0.5     $ 5.4     $ 5.4  
 
                                               
Proportionate share of net operating income (6)
  $ 0.1     $ 0.4     ($  0.0 )   $ 4.8     $ 0.1     $ 0.5     $ 15.7          
 
                                                 
Proportionate share of interest expense (6)
  $ 0.0     $ 0.2     $ 0.0     $ 1.7     $ 0.0     $ 0.1     $ 7.2          
 
                                                 
Funds From Operations (“FFO”):
                                                               
Net income (loss)
    0.1       0.4       (0.0 )     12.6       (0.2 )     1.8       21.0       5.3  
Depreciation of real property
    0.1       0.4       0.0       9.1       0.3       0.0       20.2       4.4  
(Gain) loss on sale
    0.0       0.0       0.0       0.0       0.0       (0.0 )     (0.0 )     (0.0 )
Disproportionate Share of Income
                                              0.2 (9)
 
                                               
 
  $ 0.2     $ 0.8     $ 0.0     $ 21.7     $ 0.1     $ 1.8     $ 41.2     $ 9.9  
 
                                                             
DDR ownership interest
    20 %     20 %     20 %     ***       50 %     ***                  
 
                                               
DDR FFO
  $ 0.0     $ 0.2     ($  0.0 )   $ 4.0     $ 0.1     $ 0.5     $ 9.9          
 
                                                 
Joint Venture Financials 4.1

 


 

     
Developers Diversified Realty
Quarterly Financial Supplement
For the three months ended March 31, 2006
 
(1)   Amounts may differ slightly from actual results, due to rounding.
 
(2)   Asset values reflect historical cost basis due to acquisition of partnership interest (i.e. does not reflect step up in basis).
 
(3)   Represents undeveloped land.
 
(4)   The Company owns an approximate 25% economic interest in a joint venture that acquired the designation rights to real estate assets owned and controlled by Service Merchandise. Tax expense, if applicable, is reflected in DDR Consolidated Statement of Operations.
 
    The joint venture’s interest expense of $2.2 million for the three months ended March 31, 2006 relates to a loan payable to DDR and is reflected in revenues from operations in the Company’s Consolidated Statement of Operations.
 
(5)   Represents residual joint venture assets sold to the MDT Joint Venture and operating income of the joint ventures in Salisbury, Maryland and Pasadena, California acquired by DDR in 2006.
 
(6)   Does not include the Company’s share of net operating income or interest expense for sales of properties classified as discontinued operations at the Service Merchandise joint venture.
 
(7)   Adjustments represent the effect of promoted equity structures. These adjustments are primarily at the RVIP IIIB, RVIP VII and the DDR/Macquarie Fund LLC joint ventures. The Company estimated the fair market value of all promoted interests to be approximately $69 million at December 31, 2005.
 
(8)   Adjustments represent the effect of promoted interests on DDR’s share of the income primarily RVIP IIIB and RVIP VII joint ventures which have ongoing operations and an $0.8 million asset management promote through DDR/Macquarie Fund LLC.
 
(9)   Adjustments associated with Coventry’s disproportionate share of FFO (primarily related to depreciation) less applicable minority ownership interests at the RVIP IIIB and RVIP VII joint ventures pursuant to the terms of the partnership agreements. Amount is not included in disproportionate net income reflected in (8) above.
 
***   See Section 4.2, Joint Venture Summaries, discussing respective ownership percentage, as ownership percentage may have changed during the year, or the promoted interest is in effect.
Joint Venture Financials 4.1

 


 

Developers Diversified Realty
Quarterly Financial Supplemental
For the three months ended March 31, 2006
 
 
Joint Venture Investment Summary
     
Joint Venture Name:
  Retail Value Investment Program LP III
Date Formed:
  January 1998
Property Name/Location:
  City Place — Long Beach, CA
 
   
Major Tenants:
  None (Property Sold on 8/2/05)
 
   
Partnership Structure
  1% — Coventry Real Estate Partners
Equity Contribution:
  24.75% — DDR
 
   
 
  74.25% - Prudential Real Estate Investors (PREI)
 
   
Cash Flow Distribution:
  1% — Coventry Real Estate Partners