Developers Diversified Realty Corp. 10-K

10-K 1 l17858ae10vk.htm DEVELOPERS DIVERSIFIED REALTY CORPORATION 10-K/FYE 12-31-05 Developers Diversified Realty Corp. 10-K

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-K


(Mark One)

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

		FOR THE FISCAL YEAR ENDED DECEMBER 31, 2005
OR

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

For the transition period from to

Commission file number 1-11690

DEVELOPERS DIVERSIFIED REALTY CORPORATION

(Exact Name of Registrant as Specified in Its Charter)


Ohio		34-1723097

(State or Other Jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification No.)

3300 Enterprise Parkway, Beachwood, Ohio 44122

(Address of Principal Executive Offices — Zip Code)

(216) 755-5500

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


		Name of Each Exchange on
Title of Each Class		Which Registered

Common Shares, Without Par Value		New York Stock Exchange
Depositary Shares Representing Class F Cumulative Redeemable Preferred Shares		New York Stock Exchange
Depositary Shares Representing Class G Cumulative Redeemable Preferred Shares		New York Stock Exchange
Depositary Shares Representing Class H Cumulative Redeemable Preferred Shares		New York Stock Exchange
Depositary Shares Representing Class I Cumulative Redeemable Preferred Shares		New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act:

None

(Title of Class)

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes þ No o

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes o No þ

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer þ Accelerated filer o Non-accelerated filer o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No þ

The aggregate market value of the voting stock held by non-affiliates of the registrant at June 30, 2005 was $4.8 billion.

(APPLICABLE ONLY TO CORPORATE REGISTRANTS)

Indicate the number of shares outstanding of each of the registrant’s classes of common stock as of the latest practicable date.

108,965,988 common shares outstanding as of February 15, 2006

DOCUMENTS INCORPORATED BY REFERENCE

The registrant incorporates by reference in Part III hereof portions of its definitive Proxy Statement for its 2006 Annual Meeting of Shareholders.

TABLE OF CONTENTS


		Report
Item No.		Page

	PART I
1.	Business		3
1a.	Risk Factors		6
1b.	Unresolved Staff Comments		13
2.	Properties		13
3.	Legal Proceedings		50
4.	Submission of Matters to a Vote of Security Holders		50

	PART II
5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities		52
6.	Selected Financial Data		53
7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		57
7a.	Quantitative and Qualitative Disclosures about Market Risk		102
8.	Financial Statements and Supplementary Data		104
9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure		104
9a.	Controls and Procedures		104
9b.	Other Information		104

	PART III
10.	Directors and Executive Officers of the Registrant		104
11.	Executive Compensation		105
12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters		105
13.	Certain Relationships and Related Transactions		106

	PART IV
14.	Principal Accountant Fees and Services		106
15.	Exhibits, Financial Statement Schedules		106
EX-21.1 List of Subsidiaries
EX-23.1 Consent of PriceWaterHouseCoopers LLP
EX-31.1 Certification of Principal Executive Officer
EX-31.2 Certification of Principal Financial Officer
EX-32.1 Certification of Chief Executive Officer
EX-32.2 Certification of Chief Financial Officer

PART I


Item 1.	BUSINESS


	General Development of Business

Developers Diversified Realty Corporation, an Ohio Corporation (the “Company” or “DDR”), a self-administered and self-managed real estate investment trust (a “REIT”), is in the business of acquiring, developing, redeveloping, owning, leasing and managing shopping centers. Unless otherwise provided, references herein to the Company or DDR includes Developers Diversified Realty Corporation, its wholly-owned and majority-owned subsidiaries and its consolidated and unconsolidated joint ventures.

From January 1, 2001 to February 15, 2006, the Company and its joint ventures have acquired 309 shopping center properties. The Company acquired two properties in 2006 (one acquired through a joint venture and one by acquiring its joint venture partner’s interest), 52 properties in 2005 (including 36 of which were acquired through a consolidated joint venture and one by acquiring its joint venture partner’s interest), 112 properties in 2004 (including 18 acquired through joint ventures and one by acquiring its joint venture partner’s interest), 124 properties in 2003 (including 117 shopping center and development properties acquired through the merger with JDN Realty Corporation (“JDN”) and three of which were joint ventures), 11 properties in 2002 (four by acquiring its joint venture partners’ interest) and eight properties in 2001 (all of which were through joint ventures). In addition, in 2002 a joint venture in which the Company owns an approximate 25% equity interest was awarded the asset designation rights of Service Merchandise retail real estate interests in approximately 200 properties. At December 31, 2005, 53 of these properties remained. Also, in connection with the merger of American Industrial Properties REIT (“AIP”) on May 14, 2001, the Company purchased 37 business centers and two shopping centers. From May 2001 through December 31, 2005, the Company disposed of 32 of these business centers, including 25 during 2005. Of the 52 properties acquired in 2005, 15 properties are located in Puerto Rico.

The Company’s executive offices are located at 3300 Enterprise Parkway, Beachwood, Ohio 44122, and its telephone number is (216) 755-5500. The Company’s website is located at http://www.ddr.com. On its website, you can obtain a copy of the annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act of 1934, as amended, as soon as reasonably practicable after the Company files such material electronically with, or furnish it to, the Securities and Exchange Commission (the “SEC”). A copy of these filings is available to all interested parties upon written request to Michelle M. Dawson, Vice President of Investor Relations, at the Company’s corporate offices.

The Company files annual, quarterly and special reports, proxy statements and other information with the SEC. You may read and copy any document the Company files with the SEC at the SEC’s Public Reference Room at 100 F Street, N.W., Washington D.C. 20549. You may obtain information about the operation of the SEC’s Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC also maintains a website that contains reports, proxy and information statements, and other information regarding registrants that file electronically with the SEC (http://www.sec.gov). You can inspect reports and other information that the Company files at the offices of the New York Stock Exchange, Inc., 20 Broad Street, New York, New York 10005.


	Financial Information about Industry Segments

The Company is in the business of acquiring, developing, redeveloping, owning, leasing and managing shopping centers and business centers. See the consolidated financial statements and notes thereto included in Item 15 of this Annual Report on Form 10-K for certain information required by Item 1.


	Narrative Description of Business

The Company’s portfolio as of February 15, 2006, consisted of 469 shopping centers and seven business centers (including 162 properties owned through unconsolidated joint ventures) and more than 560 acres of

undeveloped land (of which approximately 20 acres are owned through joint ventures) (the “Portfolio Properties”). These properties consist of shopping centers, mini-malls and lifestyle centers. From January 1, 2003, to February 15, 2006, the Company acquired 290 shopping centers (including 55 properties owned through joint ventures) containing an aggregate of approximately 33.4 million square feet of gross leasable area (“GLA”) owned by the Company for an aggregate purchase price of approximately $7.9 billion.

As of February 15, 2006, the Company was expanding eight wholly-owned properties and three of its joint venture properties and expects to commence expansions at one additional wholly-owned and two additional joint venture shopping centers in 2006. As of December 31, 2005, the Company had eight wholly-owned shopping centers and three joint venture shopping centers under development.

At December 31, 2005, the aggregate occupancy of the Company’s 469 shopping center portfolio was 95.3%, as compared to 94.7% at December 31, 2004. The average annualized base rent per occupied square foot was $11.01 at December 31, 2005, as compared to $10.79 at December 31, 2004.

At December 31, 2005, the aggregate occupancy rate of the Company’s 269 wholly-owned shopping centers was 94.4%, as compared to 93.7% at December 31, 2004. The average annualized base rent per leased square foot was $10.42 at December 31, 2005, as compared to $9.70 at December 31, 2004.

At December 31, 2005, the aggregate occupancy rate of the Company’s 200 joint venture shopping centers (including 37 of which are consolidated centers) was 97.0%, as compared to 97.1% at December 31, 2004. The average annualized base rent per leased square foot of its joint ventures was $12.05 at December 31, 2005, as compared to $12.15 at December 31, 2004.

The aggregate occupancy of the Company’s business centers was 43.2% at December 31, 2005, as compared to 76.0% at December 31, 2004. The Company sold 25 of its business centers in September 2005. The remaining business centers consist of seven assets in five states.

The Company is self-administered and self-managed and, therefore, does not engage or pay for a REIT advisor. The Company manages all of the Portfolio Properties. At December 31, 2005, the Company owned and/or managed over 82.9 million total square feet of GLA, which included all of the Portfolio Properties and 13 properties owned by third parties.


	Strategy and Philosophy

The Company’s investment objective is to increase cash flow and the value of its Portfolio Properties and to seek continued growth through the selective acquisition, development, redevelopment, renovation and expansion of income-producing real estate properties, primarily shopping centers. In addition, the Company may also pursue the disposition of certain real estate assets and utilize the proceeds to repay debt, reinvest in other real estate assets and developments and apply to other corporate purposes. In pursuing its investment objective, the Company will continue to seek to acquire and develop high quality, well-located shopping centers with attractive initial yields and strong prospects for future cash flow growth and capital appreciation where the Company’s financial strength and management and leasing capabilities can enhance value.

Management believes that opportunities to acquire existing shopping centers have been and will continue to be available to a buyer, such as the Company, with access to capital markets and institutional investors. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources” within Item 7.

The Company’s real estate strategy and philosophy is to grow its business through a combination of leasing, expansion, acquisition and development. The Company seeks to:


	•	Increase cash flows and property values through strategic leasing, re-tenanting, renovation and expansion of the Company’s portfolio;

	•	Continue to selectively acquire well-located, quality shopping centers (individually or in portfolio transactions) that have leases at rental rates below market rates or other cash flow growth or capital

appreciation potential where the Company’s financial strength, relationships with retailers and management capabilities can enhance value;

• Increase cash flows and property values by continuing to take advantage of attractive financing and refinancing opportunities (see “Recent Developments — Financings”);

• Increase per share cash flows through the strategic disposition of low growth assets and utilizing the proceeds to repay debt, invest in other real estate assets and/or developments;

• Selectively develop the Company’s undeveloped parcels or new sites in areas with attractive demographics;

• Hold properties for long-term investment and place a strong emphasis on regular maintenance, periodic renovation and capital improvements, and

• Continue to manage and develop the properties of others to generate fee income, subject to restrictions imposed by federal income tax laws, and create opportunities for acquisitions.

As part of its ongoing business, the Company engages in discussions with public and private real estate entities regarding possible portfolio or asset acquisitions or business combinations.

In addition, the Company intends to maintain a conservative debt capitalization ratio. At December 31, 2005, the Company’s debt to total market capitalization ratio, excluding the Company’s proportionate share of indebtedness of its unconsolidated joint ventures, was approximately 0.40 to 1.0. At December 31, 2005, the Company’s capitalization consisted of $3.9 billion of debt, $705 million of preferred shares and $5.2 billion of market equity (market equity is defined as common shares and Operating Partnership Units (“OP Units”) outstanding, multiplied by the closing price of the common shares on the New York Stock Exchange at December 31, 2005 of $47.02), resulting in a debt to total market capitalization ratio of 0.40 to 1.0, as compared to the ratios of 0.33 to 1.0 and 0.37 to 1.0 at December 31, 2004 and 2003, respectively. Fluctuations in the market price of the Company’s common shares may cause this ratio to vary from time to time. At December 31, 2005, the Company’s total debt consisted of $3,079.3 million of fixed rate debt and $811.4 million of variable rate debt, including $60 million of fixed rate debt that has been effectively swapped to a weighted average variable rate.

The strategy, philosophy, investment and financing policies of the Company, and its policies with respect to certain other activities, including its growth, debt capitalization, distributions, status as a REIT and operating policies, are determined by the Board of Directors. Although it has no present intention to do so, the Board of Directors may amend or revise these policies from time to time without a vote of the shareholders of the Company.


	Recent Developments

In January 2006, the Company acquired its partner’s 75% ownership interest in a shopping center located in Pasadena, California, for a purchase price of approximately $55.9 million, net of mortgage debt of approximately $85.0 million that was repaid in connection with the acquisition.

In February 2006, the Company issued approximately 0.4 million of its common shares to Benderson Development Company in connection with the conversion of operating partnership units pursuant to the terms of the purchase and sale agreement entered into in March 2004.

See “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in Item 7 and the Consolidated Financial Statements and Notes thereto included in Item 8 of this Annual Report on Form 10-K for further information on certain of the recent developments described above.


	Competition

As one of the nation’s largest owners and developers of shopping centers, the Company has established close relationships with a large number of major national and regional retailers. The Company’s management is associated with and actively participates in many shopping center and REIT industry organizations.

Notwithstanding these relationships, numerous developers and real estate companies compete with the Company in seeking properties for acquisition and leasing space in these properties to tenants.


	Employees

As of February 15, 2006, the Company employed 548 full-time individuals, including executive, administrative and field personnel. The Company considers its relations with its personnel to be good.


	Qualification as a Real Estate Investment Trust

As of December 31, 2005, the Company met the qualification requirements of a REIT under Sections 856-860 of the Internal Revenue Code of 1986, as amended (the “Code”). As a result, the Company, with the exception of its taxable REIT subsidiaries, will not be subject to federal income tax to the extent it meets certain requirements of the Code.


Item 1a.	RISK FACTORS

The Economic Performance and Value of the Company’s Shopping Centers Depend on Many Factors, Each of Which Could Have an Adverse Impact on Its Cash Flows and Operating Results

The economic performance and value of the Company’s real estate holdings can be affected by many factors, including the following:


	•	Changes in the national, regional and local economic climate;

	•	Local conditions such as an oversupply of space or a reduction in demand for real estate in the area;

	•	The attractiveness of the properties to tenants;

	•	Competition from other available space;

	•	The Company’s ability to provide adequate management services and to maintain its properties;

	•	Increased operating costs, if these costs cannot be passed through to tenants and

	•	The expense of periodically renovating, repairing and reletting spaces.

The Company’s properties consist primarily of community and neighborhood shopping centers and, therefore, its performance is linked to general economic conditions in the market for retail space. The market for retail space has been and may continue to be adversely affected by weakness in the national, regional and local economies, the adverse financial condition of some large retailing companies, the ongoing consolidation in the retail sector, the excess amount of retail space in a number of markets and increasing consumer purchases through catalogues and the Internet. To the extent that any of these conditions occur, they are likely to affect market rents for retail space. In addition, the Company may face challenges in the management and maintenance of the properties or encounter increased operating costs, such as real estate taxes, insurance and utilities, which may make its properties unattractive to tenants. The loss of rental revenues from a number of the Company’s tenants and its inability to replace such tenants may adversely affect the Company’s profitability and ability to meet its debt and other financial obligations and make distributions to the shareholders.

The Company’s Dependence on Rental Income May Adversely Affect Its Ability to Meet Its Debt Obligations and Make Distributions to the Shareholders

Substantially all of the Company’s income is derived from rental income from real property. As a result, the Company’s performance depends on its ability to collect rent from tenants. The Company’s income and funds for distribution would be negatively affected if a significant number of its tenants, or any of its major tenants (as discussed in more detail below):


	•	Experience a downturn in their business that significantly weakens their ability to meet their obligations to the Company;


	•	Delay lease commencements;

	•	Decline to extend or renew leases upon expiration;

	•	Fail to make rental payments when due or

	•	Close stores or declare bankruptcy.

Any of these actions could result in the termination of the tenant’s leases and the loss of rental income attributable to the terminated leases. Lease terminations by an anchor tenant or a failure by that anchor tenant to occupy the premises could also result in lease terminations or reductions in rent by other tenants in the same shopping centers under the terms of some leases. In addition, the Company cannot be sure that any tenant whose lease expires will renew that lease or that it will be able to re-lease space on economically advantageous terms. The loss of rental revenues from a number of the Company’s tenants and its inability to replace such tenants may adversely affect the Company’s profitability and its ability to meet debt and other financial obligations and make distributions to the shareholders.

The Company Relies on Major Tenants, Making It Vulnerable to Changes in the Business and Financial Condition of, or Demand for Its Space by, Such Tenants

As of December 31, 2005, the annualized base rental revenues from Wal-Mart, Tops Market (Royal Ahold), Mervyns, PETsMART, TJ Maxx, Bed Bath & Beyond, Kohl’s and Lowe’s represented 5.4%, 3.1%, 2.8%, 2.0%, 1.9%, 1.7%, 1.7% and 1.7%, respectively, of the Company’s aggregate annualized shopping center base rental revenues, including its proportionate share of joint venture aggregate annualized shopping center base rental revenues. The Company’s income and ability to meet its financial obligations could be adversely affected in the event of the bankruptcy or insolvency of, or a significant downturn in the business of, one of these tenants or any of the Company’s other major tenants. In addition, the Company’s results could be adversely affected if any of these tenants does not renew multiple lease terms as they expire.

The Company’s Acquisition Activities May Not Produce the Cash Flows That It Expects and May Be Limited by Competitive Pressures or Other Factors

The Company intends to acquire existing retail properties to the extent that suitable acquisitions can be made on advantageous terms. Acquisitions of commercial properties entail risks such as:


	•	The Company’s estimates on expected occupancy and rental rates may differ from actual conditions;

	•	The Company’s estimates of the costs of any redevelopment or repositioning of acquired properties may prove to be inaccurate;

	•	The Company may be unable to operate successfully in new markets where acquired properties are located, due to a lack of market knowledge or understanding of local economies;

	•	The Company may be unable to successfully integrate new properties into its existing operations; or

	•	The Company may have difficulty obtaining financing on acceptable terms or paying the operating expenses and debt service associated with acquired properties prior to sufficient occupancy.

In addition, the Company may not be in a position or have the opportunity in the future to make suitable property acquisitions on advantageous terms due to competition for such properties with others engaged in real estate investment who may have greater financial resources than the Company. The Company’s inability to successfully acquire new properties may affect the Company’s ability to achieve anticipated return on investment, which could have an adverse effect on its results of operations.

The Company’s Articles of Incorporation Contain Limitations on Acquisitions and Changes in Control

In order to maintain the Company’s status as a REIT, its articles of incorporation prohibit any person, except for certain existing shareholders at the time of its initial public offering, from owning more than 5% of the Company’s outstanding common shares. This restriction is likely to discourage third parties from acquiring

control of DDR without consent of its board of directors even if a change in control was in the interest of shareholders.

Real Estate Property Investments Are Illiquid, and Therefore the Company May Not Be Able to Dispose of Properties When Appropriate or on Favorable Terms

Real estate property investments generally cannot be disposed of quickly. In addition, the federal tax code imposes restrictions on the ability of a REIT to dispose of properties that are not applicable to other types of real estate companies. Therefore, the Company may not be able to vary its portfolio in response to economic or other conditions promptly or on favorable terms, which could cause the Company to incur extended losses and reduce its cash flows and adversely affect distributions to shareholders.

The Company’s Development and Construction Activities Could Affect Its Operating Results

The Company intends to continue the selective development and construction of retail properties in accordance with its development and underwriting policies as opportunities arise. The Company’s development and construction activities include risks that:


	•	The Company may abandon development opportunities after expending resources to determine feasibility;

	•	Construction costs of a project may exceed the Company’s original estimates;

	•	Occupancy rates and rents at a newly completed property may not be sufficient to make the property profitable;

	•	Rental rates per square foot could be less than projected;

	•	Financing may not be available to the Company on favorable terms for development of a property;

	•	The Company may not complete construction and lease-up on schedule, resulting in increased debt service expense and construction costs and

	•	The Company may not be able to obtain, or may experience delays in obtaining necessary zoning, land use, building, occupancy and other required governmental permits and authorizations.

Additionally, the time frame required for development, construction and lease-up of these properties means that the Company may have to wait years for a significant cash return. If any of the above events occur, the development of properties may hinder the Company’s growth and have an adverse effect on its results of operations. In addition, new development activities, regardless of whether or not they are ultimately successful, typically require substantial time and attention from management.

The Company Has Variable Rate Debt and Is Subject to Interest Rate Risk

The Company has a substantial amount of mortgage debt with interest rates that vary depending upon the market index. In addition, the Company has a revolving credit facility that bears interest at a variable rate on all amounts drawn on the facility. The Company may incur additional variable rate debt in the future. Increases in interest rates on variable rate debt would increase the Company’s interest expense, which would adversely affect net earnings and cash available for payment of its debt obligations and distributions to the shareholders.

The Company’s Ability to Increase Its Debt Could Adversely Affect Its Cash Flow

At December 31, 2005, the Company had outstanding debt of approximately $3.9 billion (excluding its proportionate share of joint venture mortgage debt aggregating $510.5 million). The Company intends to continue to maintain a conservative debt capitalization with a ratio of debt to total market capitalization (the sum of the aggregate market value of the Company’s common shares, the liquidation preference on any preferred shares outstanding and its total indebtedness) of less than 50%. In addition, the Company is subject to limitations under its credit facilities and indentures relating to its ability to incur further debt; however, the Company’s organizational documents do not contain any limitation on the amount or percentage of indebtedness it may incur.

If the Company were to become more highly leveraged, its cash needs to fund debt service would increase accordingly. Under such circumstances, the Company’s risk of decreases in cash flow, due to fluctuations in the real estate market, reliance on its major tenants, acquisition and development costs and the other factors discussed above could subject the Company to an even greater adverse impact on its financial condition and results of operations. In addition, increased leverage could increase the risk of default on the Company’s debt obligations, which could further reduce its cash available for distribution and adversely affect its ability to dispose of its portfolio on favorable terms, which could cause the Company to incur extended losses and reduce its cash flows.

The Company’s Cash Flows and Operating Results Could Be Adversely Affected by Required Payments of Debt or Related Interest and Other Risks of Its Debt Financing

The Company is generally subject to risks associated with debt financing. These risks include:


	•	The Company’s cash flow may not satisfy required payments of principal and interest;

	•	The Company may not be able to refinance existing indebtedness on its properties as necessary or the terms of the refinancing may be less favorable to the Company than the terms of existing debt;

	•	Required debt payments are not reduced if the economic performance of any property declines;

	•	Debt service obligations could reduce funds available for distribution to the Company’s shareholders and funds available for acquisitions;

	•	Any default on the Company’s indebtedness could result in acceleration of those obligations and possible loss of property to foreclosure and

	•	The risk that necessary capital expenditures for purposes such as re-leasing space cannot be financed on favorable terms.

If a property is mortgaged to secure payment of indebtedness and the Company cannot make the mortgage payments, it may have to surrender the property to the lender with a consequent loss of any prospective income and equity value from such property. Any of these risks can place strains on the Company’s cash flows, reduce its ability to grow and adversely affect its results of operations.

The Company’s Financial Condition Could Be Adversely Affected by Financial Covenants

The Company’s credit facilities and the indentures under which its senior and subordinated unsecured indebtedness is, or may be, issued contain certain financial and operating covenants, including, among other things, certain coverage ratios, as well as limitations on the Company’s ability to incur secured and unsecured indebtedness, sell all or substantially all of its assets and engage in mergers and consolidations and certain acquisitions. These covenants could limit the Company’s ability to obtain additional funds needed to address cash shortfalls or pursue growth opportunities or transactions that would provide substantial return to its shareholders. In addition, a breach of these covenants could cause a default under or accelerate some or all of the Company’s indebtedness, which could have a material adverse effect on its financial condition.

The Company’s Ability to Continue to Obtain Permanent Financing Cannot Be Assured

In the past, the Company has financed certain acquisitions and certain development activities in part with proceeds from its credit facilities or offerings of its debt securities. These financings have been, and may continue to be, replaced by more permanent financing. However, the Company may not be able to obtain more permanent financing for future acquisitions or development activities on acceptable terms. If market interest rates were to increase or other unfavorable market conditions exist at a time when amounts were outstanding under the Company’s credit facilities, or if other variable rate debt was outstanding, the Company’s debt interest costs would increase, causing potentially adverse effects on its financial condition and results of operations.

If the Company Fails to Qualify as a REIT in Any Taxable Year, It Will Be Subject to U.S. Federal Income Tax as a Regular Corporation and Could Have Significant Tax Liability

The Company intends to operate in a manner that allows it to qualify as a REIT for U.S. federal income tax purposes. However, REIT qualification requires that the Company satisfy numerous requirements (some on an annual or quarterly basis) established under highly technical and complex provisions of the Internal Revenue Code of 1986, as amended, or the Code, for which there are a limited number of judicial or administrative interpretations. The Company’s status as a REIT requires an analysis of various factual matters and circumstances that are not entirely within its control. Accordingly, it is not certain the Company will be able to qualify and remain qualified as a REIT for U.S. federal income tax purposes. Even a technical or inadvertent violation of the REIT requirements could jeopardize the Company’s REIT qualification. Furthermore, Congress or the Internal Revenue Service, or IRS, might change the tax laws or regulations and the courts might issue new rulings, in each case potentially having retroactive effect that could make it more difficult or impossible for the Company to qualify as a REIT. If the Company fails to qualify as a REIT in any tax year, then:


	•	the Company would be taxed as a regular domestic corporation, which, among other things, means that it would be unable to deduct distributions to its shareholders in computing its taxable income and would be subject to U.S. federal income tax on its taxable income at regular corporate rates;

	•	any resulting tax liability could be substantial and would reduce the amount of cash available for distribution to shareholders, and could force the Company to liquidate assets or take other actions that could have a detrimental effect on its operating results; and

	•	unless the Company was entitled to relief under applicable statutory provisions, it would be disqualified from treatment as a REIT for the four taxable years following the year during which the Company lost its qualification, and its cash available for distribution to its shareholders therefore would be reduced for each of the years in which the Company does not qualify as a REIT.

Even if the Company remains qualified as a REIT, it may face other tax liabilities that reduce its cash flow. The Company may also be subject to certain U.S. federal, state and local taxes on its income and property either directly or at the level of its subsidiaries. Any of these taxes would decrease cash available for distribution to the Company’s shareholders.

Compliance with REIT Requirements May Negatively Affect the Company’s Operating Decisions

To maintain its status as a REIT for U.S. federal income tax purposes, the Company must meet certain requirements, on an on-going basis, including requirements regarding its sources of income, the nature and diversification of its assets, the amounts the Company distributes to its shareholders and the ownership of its shares. The Company may also be required to make distributions to its shareholders when it does not have funds readily available for distribution or at times when the Company’s funds are otherwise needed to fund capital expenditures.

As a REIT, the Company must distribute at least 90% of its annual net taxable income (excluding net capital gains) to its shareholders. To the extent that the Company satisfies this distribution requirement, but distributes less than 100% of its net taxable income, the Company will be subject to U.S. federal corporate income tax on its undistributed taxable income. In addition, the Company will be subject to a 4% nondeductible excise tax if the actual amount that it pays to its shareholders in a calendar year is less than a minimum amount specified under U.S. federal tax laws. From time to time, the Company may generate taxable income greater than its income for financial reporting purposes, or its net taxable income may be greater than its cash flow available for distribution to its shareholders. If the Company does not have other funds available in these situations, it could be required to borrow funds, sell a portion of its securities at unfavorable prices or find other sources of funds in order to meet the REIT distribution requirements and to avoid corporate income tax and the 4% excise tax.

In addition, the REIT provisions of the Code impose a 100% tax on income from “prohibited transactions.” Prohibited transactions generally include sales of assets that constitute inventory or other property held for sale to customers in the ordinary course of business, other than foreclosure property. This 100% tax could impact the Company’s decisions to sell property if it believes such sales could be treated as a

prohibited transaction. However, the Company would not be subject to this tax if it were to sell assets through a taxable REIT subsidiary. The Company will also be subject to a 100% tax on certain amounts if the economic arrangements between the Company and a taxable REIT subsidiary are not comparable to similar arrangements among unrelated parties.

Dividends Paid by REITs Generally Do Not Qualify for Reduced Tax Rates

In general, the maximum U.S. federal income tax rate for dividends paid to individual U.S. shareholders is 15% (through 2008). Unlike dividends received from a corporation that is not a REIT, the Company’s distributions to individual shareholders generally are not eligible for the reduced rates.

Property Ownership Through Partnerships and Joint Ventures Could Limit the Company’s Control of Those Investments and Reduce Its Expected Return

Partnership or joint venture investments may involve risks not otherwise present for investments made solely by the Company, including the possibility that the Company’s partner or co-venturer might become bankrupt, that its partner or co-venturer might at any time have different interests or goals than the Company, and that its partner or co-venturer may take action contrary to the Company’s instructions, requests, policies or objectives, including the Company’s policy with respect to maintaining its qualification as a REIT. Other risks of joint venture investments include impasse on decisions, such as a sale, because neither the Company’s partner or co-venturer nor the Company would have full control over the partnership or joint venture. These factors could limit the return that the Company receives from such investments or cause its cash flows to be lower than its estimates. There is no limitation under the Company’s amended and restated articles of incorporation, or its code of regulations as to the amount of funds that the Company may invest in partnerships or joint ventures. As of December 31, 2005, the Company had approximately $275.1 million of investments in and advances to unconsolidated partnerships and joint ventures holding 163 operating shopping centers.

The Company’s Inability to Realize the Anticipated Returns from Its Retail Real Estate Assets Outside the United States Could Adversely Affect Its Results of Operations

The Company may not realize the intended benefits of the transactions outside the United States as the Company may not have any prior experience with local economies or culture. The assets may not perform as well as the Company anticipated or may not be successfully integrated, or the Company may not realize the improvements in occupancy and operating results that it anticipated. In addition, the Company could be subject to local laws governing these properties, with which it has no prior experience, and which may present new challenges for the management of the Company’s operations. Each of these factors may adversely affect the Company’s ability to achieve anticipated return on investment, which could have an adverse effect on its results of operations.

The Company’s Real Estate Investments May Contain Environmental Risks That Could Adversely Affect Its Operating Results

The acquisition of certain of the assets may subject the Company to liabilities, including environmental liabilities. The Company’s operating expenses could be higher than anticipated due to the cost of complying with existing or future environmental laws and regulations. In addition, under various federal, state and local laws, ordinances and regulations, the Company may be considered an owner or operator of real property or to have arranged for the disposal or treatment of hazardous or toxic substances. As a result, the Company may become liable for the costs of removal or remediation of certain hazardous substances released on or in its property. The Company may also be liable for other potential costs that could relate to hazardous or toxic substances (including governmental fines and injuries to persons and property). The Company may incur such liability whether or not it knew of, or was responsible for, the presence of such hazardous or toxic substances. Such liability could be of substantial magnitude and divert management’s attention from other aspects of the Company’s business and, as a result, could have a material adverse effect on the Company’s operating results and financial condition, as well as its ability to make distributions to the shareholders.

An Uninsured Loss or a Loss That Exceeds the Policies on the Company’s Properties Could Subject the Company to Lost Capital or Revenue on Those Properties

Under the terms and conditions of the leases currently in force on the Company’s properties, tenants generally are required to indemnify and hold the Company harmless from liabilities resulting from injury to persons, air, water, land or property, on or off the premises, due to activities conducted on the properties, except for claims arising from the negligence or intentional misconduct of the Company or its agents. Additionally, tenants are generally required, at the tenant’s expense, to obtain and keep in full force during the term of the lease, liability and full replacement value property damage insurance policies. The Company has obtained comprehensive liability, casualty, flood and rental loss insurance policies on the properties. All of these policies may involve substantial deductibles and certain exclusions. In addition, the Company cannot assure the shareholders that the tenants will properly maintain their insurance policies or have the ability to pay the deductibles. Should a loss occur that is uninsured or in an amount exceeding the combined aggregate limits for the policies noted above, or in the event of a loss that is subject to a substantial deductible under an insurance policy, the Company could lose all or part of its capital invested in, and anticipated revenue from, one or more of the properties, which could have a material adverse effect on the Company’s operating results and financial condition, as well as its ability to make distributions to the shareholders.

Compliance with the Americans with Disabilities Act and Fire, Safety and Other Regulations May Require the Company to Make Unintended Expenditures That Adversely Affect the Company’s Cash Flows

All of the Company’s properties are required to comply with the Americans with Disabilities Act, (“ADA”). The ADA has separate compliance requirements for “public accommodations” and “commercial facilities,” but generally requires that buildings be made accessible to people with disabilities. Compliance with the ADA requirements could require removal of access barriers, and non-compliance could result in imposition of fines by the U.S. government or an award of damages to private litigants, or both. While the tenants to whom the Company leases properties are obligated by law to comply with the ADA provisions, and typically under tenant leases are obligated to cover costs associated with compliance, if required changes involve greater expenditures than anticipated, or if the changes must be made on a more accelerated basis than anticipated, the ability of these tenants to cover costs could be adversely affected. As a result, the Company could be required to expend funds to comply with the provisions of the ADA, which could adversely affect the results of operations and financial condition and its ability to make distributions to shareholders. In addition, the Company is required to operate the properties in compliance with fire and safety regulations, building codes and other land use regulations, as they may be adopted by governmental agencies and bodies and become applicable to the properties. The Company may be required to make substantial capital expenditures to comply with those requirements, and these expenditures could have a material adverse effect on its ability to meet the financial obligations and make distributions to the shareholders.

Changes in Market Conditions Could Adversely Affect the Market Price of the Company’s Publicly Traded Securities

As with other publicly traded securities, the market price of the Company’s publicly traded securities depends on various market conditions, which may change from time to time. Among the market conditions that may affect the market price of the Company’s publicly traded securities are the following:


	•	The extent of institutional investor interest in the Company;

	•	The reputation of REITs generally and the reputation of REITs with similar portfolios;

	•	The attractiveness of the securities of REITs in comparison to securities issued by other entities (including securities issued by other real estate companies);

	•	The Company’s financial condition and performance;

	•	The market’s perception of the Company’s growth potential and potential future cash dividends;


	•	An increase in market interest rates, which may lead prospective investors to demand a higher distribution rate in relation to the price paid for the Company’s shares and

	•	General economic and financial market conditions.

The Company Can Issue Additional Securities Without Shareholder Approval

The Company can issue preferred, equity and common stock without shareholder approval subject to certain limitations in the Company’s articles of incorporation. Holders of preferred stock have priority over holders of common stock, and the issuance of additional shares of stock reduces the interest of existing holders in the Company.

The Company’s Executive Officers Have Agreements That Provide Them with Benefits in the Event of a Change in Control of the Company or if Their Employment Agreements are Not Renewed

The Company has entered into employment agreements with certain executive officers that provide them with severance benefits if their employment ends under certain circumstances following a change in control of the Company or if the Company terminates the executive officer “without cause” as defined in the employment agreements. These benefits could increase the cost to a potential acquirer of the Company and thereby prevent or deter a change in control of the Company that might involve a premium price for the common shares or otherwise affect the interests of the shareholders.


Item 1b.	UNRESOLVED STAFF COMMENTS

None.


Item 2.	PROPERTIES

At December 31, 2005, the Portfolio Properties included 469 shopping centers (163 of which are owned through unconsolidated joint ventures) and seven business centers. The shopping centers consist of 448 community shopping centers, 17 enclosed mini-malls and four lifestyle centers. The Portfolio Properties also include over 560 undeveloped acres primarily located adjacent to certain of the shopping centers. The shopping centers aggregate approximately 81.6 million square feet of Company-owned GLA (approximately 104.3 million square feet of total GLA) and are located in 44 states, plus Puerto Rico, principally in the East and Midwest, with significant concentrations in New York, Florida and Ohio. The business centers aggregate 0.8 million square feet of Company-owned GLA and are located in five states, primarily in Texas.

The Company’s shopping centers are designed to attract local area customers and are typically anchored by two or more national tenant anchors and often include a supermarket, drug store, junior department store and/or other major “category-killer” discount retailers as additional anchors. The shopping centers are typically anchored by a Wal-Mart, Kohl’s or Target. The tenants of the shopping centers typically offer day-to-day necessities rather than high-priced luxury items. As one of the nation’s largest owners and operators of shopping centers, the Company has established close relationships with a large number of major national and regional retailers, many of which occupy space in the shopping centers.

Shopping centers make up the largest portion of the Company’s portfolio, comprising 74.9 million (91.8%) square feet of Company-owned GLA. Enclosed mini-malls account for 5.1 million (6.3%) square feet of Company-owned GLA, and the lifestyle centers account for 1.6 million (1.9%) square feet of the Company-owned GLA. On December 31, 2005, the average annualized base rent per square foot of Company-owned GLA of the Company’s 269 wholly-owned shopping centers was $10.42, and those 200 owned through joint ventures, 37 of which are consolidated assets, was $12.05. The average annualized base rent per square foot of the Company’s business centers was $10.51.

Information as to tenants that individually accounted for at least 1.0% of total annualized base rent of the Company’s properties at December 31, 2005, is included in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in Item 7 of this Annual Report on Form 10-K. In addition, as of December 31, 2005, unless otherwise indicated, with respect to the 469 shopping centers:


	•	137 of these properties are anchored by a Wal-Mart, Kohl’s or Target store;

	•	These properties range in size from 10,000 square feet to approximately 1,100,000 square feet of total GLA (with 70 properties exceeding 400,000 square feet of total GLA);

	•	Approximately 64.6% of the Company-owned GLA of these properties is leased to national tenants, including subsidiaries, approximately 21.5% of the Company-owned GLA is leased to regional tenants and approximately 9.2% of the Company-owned GLA is leased to local tenants;

	•	Approximately 95.3% of the aggregate Company-owned GLA of these properties was occupied as of December 31, 2005. (With respect to the properties owned by the Company at December 31, for each of the five years beginning with 2001, between 94.3% and 95.7% of aggregate Company-owned GLA of these properties was occupied);

	•	Eight wholly-owned properties are currently being expanded by the Company, and three properties owned by joint ventures are being expanded. The Company is pursuing the expansion of one additional wholly-owned property and two joint venture properties and

	•	Eight wholly-owned properties and three joint venture properties are currently being developed by the Company.

Tenant Lease Expirations and Renewals

The following table shows tenant lease expirations for the next ten years at the Company’s 269 wholly-owned shopping centers and seven business centers, assuming that none of the tenants exercise any of their renewal options:


							Average
							Base		Percentage of			Percentage of
					Annualized		Rent Per		Total Leased			Total Base
			Approximate		Base Rent (1)		Sq. Foot		Sq. Footage			Rental Revenues
	No. of		Lease Area in		Under Expiring		Under		Represented			Represented by
Expiration	Leases		Square Feet		Leases		Expiring		by Expiring			Expiring
Year	Expiring		(Thousands)		(Thousands)		Leases		Leases			Leases

2006		805		3,122	$	36,117	$	11.57		6.1	%		7.3	%
2007		695		3,432		37,997	$	11.07		6.7	%		7.7	%
2008		699		3,656		43,638	$	11.93		7.1	%		8.8	%
2009		599		3,893		44,939	$	11.54		7.6	%		9.1	%
2010		587		3,711		43,047	$	11.60		7.3	%		8.7	%
2011		288		3,827		39,180	$	10.24		7.5	%		7.9	%
2012		201		3,442		36,231	$	10.52		6.7	%		7.3	%
2013		154		2,895		28,487	$	9.84		5.7	%		5.7	%
2014		162		2,740		29,907	$	10.91		5.4	%		6.0	%
2015		164		2,970		31,730	$	10.68		5.8	%		6.4	%

Total		4,354		33,688	$	371,273	$	11.02		65.9	%		74.9	%


(1)	Annualized Base Rent is an industry standard of measure.

The following table shows tenant lease expirations for the next ten years at the Company’s 200 joint venture shopping centers, including 37 consolidated shopping centers, assuming that none of the tenants exercise any of their renewal options:


							Average
							Base		Percentage of			Percentage of
					Annualized		Rent Per		Total Leased			Total Base
			Approximate		Base Rent		Sq. Foot		Sq. Footage			Rental Revenues
	No. of		Lease Area in		Under Expiring		Under		Represented			Represented by
Expiration	Leases		Square Feet		Leases		Expiring		by Expiring			Expiring
Year	Expiring		(Thousands)		(Thousands)		Leases		Leases			Leases

2006		272		1,129	$	15,297	$	13.55		3.6	%		4.4	%
2007		332		1,608	$	21,915	$	13.63		5.2	%		6.3	%
2008		294		1,636	$	21,137	$	12.92		5.2	%		6.1	%
2009		289		2,149	$	26,055	$	12.12		6.9	%		7.5	%
2010		307		3,046	$	39,412	$	12.94		9.8	%		11.3	%
2011		183		2,215	$	34,699	$	15.67		7.1	%		10.0	%
2012		104		1,564	$	19,757	$	12.64		5.0	%		5.7	%
2013		95		1,192	$	15,875	$	13.32		3.8	%		4.6	%
2014		96		1,577	$	21,113	$	13.39		5.1	%		6.1	%
2015		65		1,560	$	18,837	$	12.07		5.0	%		5.4	%

Total		2,037		17,676	$	234,097	$	13.24		56.7	%		67.4	%

The rental payments under certain of these leases will remain constant until the expiration of their base terms, regardless of inflationary increases. There can be no assurance that any of these leases will be renewed or that any replacement tenants will be obtained if not renewed.

Developers Diversified Realty Corporation

Shopping Center Property List at December 31, 2005


																Company-
																Owned				Average
					Type of					Year				DDR		Gross		Total		Base Rent
			Zip		Property		Ownership			Developed/		Year		Ownership		Leasable		Annualized		(Per SF)		Percent
	Center/Property	Location	Code		(1)		Interest			Redeveloped		Acquired		Interest		Area (SF)		Base Rent		(2)		Leased		Anchor Tenants (Lease Expiration)

	Alabama

1	Birmingham, AL	Brook Highland Plaza 5291 Hwy 280 South		35242		SC		Fee			1994/2003		1994		100%		423,493	$	3,835,590	$	9.72		81.2%	Goody’s (2009), Regal Cinemas, Inc. (2014), Stein Mart (2011), OfficeMax (2011), Michael’s (2009), Books-A-Million (2010), Ross Dress for Less (2014), Lowe’s Home Centers (Not Owned)
2	Birmingham, AL	Eastwood Festival Center 7001 Crestwood Boulevard		35210		SC		Fee			1989/1999		1995		100%		301,074	$	1,862,450	$	7.46		83%	Office Depot (2007), Dollar Tree (2009), Burlington Coat Factory (2008), Regal Cinemas, Inc. (2006), Home Depot (Not Owned), Western Supermarkets (Not Owned)
3	Birmingham, AL	Riverchase Promenade Montgomery Highway		35244		SC		Fee	(3)		1989		2002		14.5%		98,016	$	1,395,703	$	15.34		92.8%	Marshall’s (2008), Goody’s (Not Owned), Toys ’R Us (Not Owned), Kids ’R Us (Not Owned)
4	Gadsden, AL	East Side Plaza 3010-3036 E. Meighan Boulevard		35903		SC		Fee			1979/2004		2003		100%		85,196	$	279,204	$	4.90		66.8%	Fred’s (2009), Food World (Not Owned)
5	Opelika, AL	Pepperell Corners 2300-2600 Pepperell Parkway Op		36801		SC		Fee			1995		2003		100%		190,127	$	1,227,560	$	6.59		98%	Lowe’s (2012), Goody’s (2010), Winn Dixie(2013)
6	Scottsboro, AL	Scottsboro Marketplace 24833 John P Reid Parkway		35766		SC		Fee			1999		2003		100%		40,560	$	453,816	$	11.19		100%	Goody’s (2011), Wal-Mart (Not Owned)
	Arizona

7	Ahwatukee, AZ	Foothills Towne Center (II) 4711 East Ray Road		85044		SC		Fee	(3)		1996/1997/ 1999		1997		50%		647,904	$	9,240,170	$	14.81		92.9%	Jo-Ann Fabrics (2010), Best Buy (2014), Bassett Furniture (2010), AMC Theatre (2021), Barnes & Noble (2012), Ashley Homestores (2011), Stein Mart (2011), Babies ’R Us (2007), Ross Dress for Less (2007), OfficeMax (2012)
8	Chandler, AZ	Mervyns Plaza 2992 N. Alma School Road		85224		MV		Fee			1985		2005		50%		74,862	$	660,000	$	8.82		100%	Mervyns (2020)
9	Mesa, AZ	Superstition Springs Center 6505 E. Southern Ave		85206		MV		Fee			1990		2005		50%		86,858	$	1,129,000	$	13.00		100%	Mervyns (2020)
10	Phoenix, AZ	Paradise Village Gateway Tatum & Shea Boulevards		85028		SC		Fee	(3)		1997/2004		2003		67%		223,208	$	4,243,063	$	17.54		96.5%	Bed Bath & Beyond (2011), Ross Dress for Less (2007), PETsMART (2015), Staples (2010), Albertson’s Drug (Not Owned)
11	Phoenix, AZ	Deer Valley Towne Center 2805 West Agua Fria Freeway		85027		SC		Fee	(3)		1996		1999		50%		197,009	$	3,093,139	$	15.70		100%	Ross Dress for Less (2009), OfficeMax (2013), PETsMART (2014), Michael’s (2009), Target (Not Owned), AMC Theatres (Not Owned)
12	Phoenix, AZ (Peoria)	Deer Valley 4255 W. Thunderbird Road		85053		MV		Fee			1979		2005		50%		81,009	$	803,000	$	9.91		100%	Mervyns (2020)

Developers Diversified Realty Corporation

Shopping Center Property List at December 31, 2005


																Company-
																Owned				Average
					Type of					Year				DDR		Gross		Total		Base Rent
			Zip		Property		Ownership			Developed/		Year		Ownership		Leasable		Annualized		(Per SF)		Percent
	Center/Property	Location	Code		(1)		Interest			Redeveloped		Acquired		Interest		Area (SF)		Base Rent		(2)		Leased		Anchor Tenants (Lease Expiration)

13	Phoenix, AZ (Peoria)	Arrowhead Crossing 7553 West Bell Road		85382		SC		Fee	(3)		1995		1996		50%		346,428	$	4,375,109	$	12.76		99%	Staples (2009), CompUSA (2013), Mac Frugal’s (2010), Barnes & Noble (2011), T.J. Maxx (2011), Circuit City (2016), DSW Shoe Warehouse (2017), Bassett Furniture (2009), Linens ’N Things (2011), Fry’s (Not Owned)
14	Phoenix, AZ	Silver Creek Plaza 4710 E. Ray Road		85044		MV		Fee			1994		2005		50%		76,214	$	839,000	$	11.01		100%	Mervyns (2020)
15	Phoenix, AZ	Phoenix Spectrum Mall 1703 West Bethany Home Road		85015		SC		GL	(3)		1961		2004		20%		389,388	$	5,021,822	$	8.57		100%	Costco (2020), Ross Dress for Less (2013), PETsMART (2019), Harkins Theatre (2002), Wal-Mart (Not Owned), Dillard’s (Not Owned)
16	Tucson, AZ	Santa Cruz Plaza 3660 S. 16th Ave		85713		MV		Fee			1982		2005		50%		76,126	$	503,000	$	6.61		100%	Mervyns (2020)
	Arkansas

17	Fayetteville, AR	Spring Creek Centre 464 E. Joyce Boulevard		72703		SC		Fee	(3)	1997/1999/ 2000/2001			1997		14.5%		262,827	$	3,030,283	$	11.53		100%	T.J. Maxx (2011), Best Buy (2017), Goody’s (2013), Old Navy (2010), Bed Bath & Beyond (2009), Wal- Mart (Not Owned), Home Depot (Not Owned)
18	Fayetteville, AR	Steele Crossing 3533-3595 N. Shiloh Dr		72703		SC		Fee	(3)		2003		2003		14.5%		50,293	$	992,568	$	14.15		100%	Kohl’s (Not Owned), Target (Not Owned)
19	N. Little Rock, AR	McCain Plaza 4124 East McCain Boulevard		72117		SC		Fee			1991/2004		1994		100%		295,013	$	1,856,100	$	6.84		92%	Bed Bath & Beyond (2013), T.J. Maxx (2007), Cinemark Theatre (2011), Burlington Coat Factory (2014), Michael’s Stores (2014), Sports Authority (2013)
20	Russellville, AR	Valley Park Centre 3093 East Main Street		72801		SC		Fee			1992		1994		100%		272,245	$	1,682,715	$	6.49		95.2%	Wal-Mart (2011), Stage (2010), J.C. Penney (2012)
	California

21	Anaheim, CA	Anaheim Hills Festival Center 8100 E. Santa Ana Canyon Road		92808		MV		Fee			1992		2005		50%		77,883	$	1,276,000	$	16.38		100%	Mervyns (2020)
22	Antioch, CA	County East Shopping Center 2602 Somersville Road		94509		MV		Fee			1970		2005		50%		75,339	$	1,158,000	$	15.37		100%	Mervyns (2020)
23	Buena Park, CA	Buena Park Mall and Entertain 100 Buena Park		90620		SC		Fee	(3)		1965		2004		20%		697,125	$	8,175,744	$	16.91		68.1%	Circuit City (2018), DSW Shoe Warehouse (2013), Ross Dress for Less (2010), Bed Bath & Beyond (2011), Kohl’s (2024), Krikorian Premier Theatres (2023), Michael’s (2014), Sears (Not Owned), Wal- Mart (Not Owned)
24	Burbank, CA	Burbank Town Center 245 E. Magnolia Boulevard		91502		MV		GL			1991		2005		50%		89,182	$	1,593,000	$	17.86		100%	Mervyns (2020)

Developers Diversified Realty Corporation

Shopping Center Property List at December 31, 2005


																Company-
																Owned				Average
					Type of					Year				DDR		Gross		Total		Base Rent
			Zip		Property		Ownership			Developed/		Year		Ownership		Leasable		Annualized		(Per SF)		Percent
	Center/Property	Location	Code		(1)		Interest			Redeveloped		Acquired		Interest		Area (SF)		Base Rent		(2)		Leased		Anchor Tenants (Lease Expiration)

25	Chino, CA	Chino Town Square Shopping 5517 Philadelphia Street		91710		MV		Fee			1986		2005		50%		81,282	$	853,000	$	10.49		100%	Mervyns (2020)
26	Clovis, CA	Sierra Vista Mall 1000 Shaw Ave		93612		MV		GL			1988		2005		50%		77,561	$	700,000	$	9.03		100%	Mervyns (2020)
27	El Cajon, CA	Westfield Shopping Town 565 Fletcher Parkway		92020		MV		GL			1989		2005		50%		85,744	$	1,229,000	$	14.33		100%	Mervyns (2020)
28	Fairfield, CA	Westfield Solano Mall 1451 Gateway Boulevard		94533		MV		Fee			1981		2005		50%		89,223	$	1,594,000	$	17.87		100%	Mervyns (2020)
29	Folsom, CA	Folsom Square 1010 E. Bidwell Street		95630		MV		Fee			2003		2005		50%		79,080	$	1,132,000	$	14.31		100%	Mervyns (2020)
30	Foothill Ranch, CA	Foothills Ranch Town Center 26732 Portola Parkway		92610		MV		Fee			1993		2005		50%		77,934	$	1,030,000	$	13.22		100%	Mervyns (2020)
31	Garden Grove, CA	Garden Grove Center 13092 Harbor Boulevard		92843		MV		Fee			1982		2005		50%		83,746	$	738,000	$	8.81		100%	Mervyns (2020)
32	Lancaster, CA	Valley Central- Discount 44707-44765 Valley Central Way		93536		SC		Fee	(3)		1990		2001		20%		348,281	$	3,672,750	$	11.23		93.9%	Marshall’s (2007), Circuit City (2011), Staples (2008), Movies 12/Cinemark (2017), Wal-Mart (2010), Costco (Not Owned)
33	Lompac, CA	Mission Plaza 1600 N. H Street		93436		MV		Fee			1992		2005		50%		62,523	$	344,000	$	5.50		100%	Mervyns (2020)
34	Long Beach, CA	The Pike 95 South Pine Avenue		90802		SC		Fee			2005		1*		100%		169,774	$	2,859,189	$	14.43		100%	Cinemark (2008), Club V 20 (2019)
35	Madera, CA	Madera 1467 Country Club Drive		93638		MV		Fee			1990		2005		50%		59,720	$	197,000	$	3.30		100%	Mervyns (2020)
36	North Fullerton, CA	North Fullerton 200 Imperial Highway		92835		MV		Fee			1991		2005		50%		76,360	$	757,000	$	9.91		100%	Mervyns (2020)
37	Northridge, CA	Northridge Plaza 8800 Corbin Avenue		91324		MV		Lease			1980		2005		50%		75,455	$	532,000	$	7.05		100%	Mervyns (2020)
38	Oceanside, CA	Ocean Place Cinemas 401-409 Mission Avenue		92054		SC		Fee			2000		1*		100%		80,450	$	1,087,496	$	15.69		86.1%	Regal Cinemas (2014)
39	Palmdale, CA	Antelope Valley Mall 1305 W. Rancho Vista Blvd		93551		MV		Fee			1992		2005		50%		76,550	$	813,000	$	10.62		100%	Mervyns (2020)
40	Pasadena, CA	Paseo Colorado 280 East Colorado Blvd.		91101		LC		Fee	(3)		2001		2003		25%		556,961	$	11,114,601	$	21.15		94.3%	Gelson’s Market (2021), Loehmann’s (2015), Equinox (2017), Macy’s (2010), Pacific Theatres Exhib. Corp (2016), DSW Shoe Warehouse (2011), J. Jill (2012), Delmonico’s Seafood (2012), PF Changs China Bistro (2016), Bombay Company (2011), Tommy Bahama (2011), Sephora (2011)

Developers Diversified Realty Corporation

Shopping Center Property List at December 31, 2005


																Company-
																Owned				Average
					Type of					Year				DDR		Gross		Total		Base Rent
			Zip		Property		Ownership			Developed/		Year		Ownership		Leasable		Annualized		(Per SF)		Percent
	Center/Property	Location	Code		(1)		Interest			Redeveloped		Acquired		Interest		Area (SF)		Base Rent		(2)		Leased		Anchor Tenants (Lease Expiration)

41	Pleasant Hill, CA	Downtown Pleasant Hill 2255 Contra Costa Blvd #101		94523		SC		Fee	(3)		1999/2000		2001		20%		347,678	$	6,385,080	$	20.29		90.5%	Albertson’s (2020), Michael’s (2010), Borders (2015), Century Theatres, Inc (2016), Bed Bath & Beyond (2010), Ross Dress for Less (2010)
42	Porterville, CA	Porterville Market Place 1275 W. Henderson Ave		93257		MV		Fee			1991		2005		50%		76,378	$	505,000	$	6.61		100%	Mervyns (2020)
43	Redding, CA	Shasta Center 1755 Hilltop Drive		96002		MV		Fee			1984		2005		50%		61,363	$	608,000	$	9.91		100%	Mervyns (2020)
44	Richmond, CA	Hilltop Plaza 3401 Blume Drive		94806		SC		Fee	(3)		1996/2000		2002		20%		245,774	$	3,641,392	$	15.00		98.8%	OfficeMax (2011), PETsMART (2012), Ross Dress for Less (2008), Barnes & Noble (2011), Circuit City (2017), Century Theatre (2016)
45	San Diego, CA	Southland Shopping Plaza 575 Saturn Boulevard		92154		MV		Fee			1982		2005		50%		75,207	$	994,000	$	13.22		100%	Mervyns (2020)
46	San Francisco, CA	Van Ness Plaza 215 1000 Van Ness Avenue		94109		SC		GL			1998		2002		100%		123,755	$	3,796,160	$	36.78		83.4%	AMC Van Ness 14 Theatres (2030), Crunch Fitness Int’l, Inc. (2008)
47	Santa Maria, CA	Town Center West Avenue 201 Town Center W		93458		MV		Fee			1988		2005		50%		84,886	$	748,000	$	8.81		100%	Mervyns (2020)
48	Santa Rosa, CA	Santa Rosa Plaza 600 Santa Rosa Plaza		95401		MV		Fee			1981		2005		50%		90,348	$	1,497,000	$	16.57		100%	Mervyns (2020)
49	Slatten Ranch, CA	Slatten Ranch Shopping Center 5849 Lone Tree Way		94531		MV		Fee			2002		2005		50%		78,819	$	1,302,000	$	16.52		100%	Mervyns (2020)
50	Sonora, CA	Sonora Crossroad Shopping 1151 Sanguinetti Road		95370		MV		Fee			1993		2005		50%		62,214	$	719,000	$	11.56		100%	Mervyns (2020)
51	Tulare, CA	Arbor Faire Shopping Center 1675 Hillman Street		93274		MV		Fee			1991		2005		50%		62,947	$	555,000	$	8.82		100%	Mervyns (2020)
52	Ukiah, CA	Ukiah 437 N. Orchard Avenue		95482		MV		Fee			1990		2005		50%		58,841	$	324,000	$	5.51		100%	Mervyns (2020)
53	West Covina, CA	West Covina Shopping Center 2753 E. Eastland Center Drive		91791		MV		GL			1979		2005		50%		82,028	$	1,515,000	$	18.47		100%	Mervyns (2020)
	Colorado

54	Alamosa, CO	Alamosa Plaza 145 Craft Drive		81101		SC		Fee			1986		1/2		100%		19,875	$	77,773	$	7.24		89.4%	City Market, Inc. (Not Owned), Big “R” (Not Owned)
55	Aurora, CO	Pioneer Hills 5400-5820 South Parker		80012		SC		Fee	(3)		2003		2003		14.5%		127,215	$	2,405,766	$	17.28		100%	Bed Bath & Beyond (2012), Office Depot (2017), Home Depot (Not Owned), Wal-Mart (Not Owned)
56	Broomfield, CO	Flatiron Marketplace Garden 1 West Flatiron Circle		80021		SC		Fee			2001		2003		100%		245,217	$	5,259,892	$	20.77		99.3%	Nordstrom (2011), Linens ’N Things (2017), Best Buy (2016), Office Depot (2016), Great Indoors (Not Owned)
57	Denver, CO	Tamarac Square 7777 E. Hampden		80231		SC		Fee			1976		2001		100%		174,780	$	1,767,979	$	13.44		66.3%	Regency Theatres Tamarac Sq. (2008)

Developers Diversified Realty Corporation

Shopping Center Property List at December 31, 2005


																Company-
																Owned				Average
					Type of					Year				DDR		Gross		Total		Base Rent
			Zip		Property		Ownership			Developed/		Year		Ownership		Leasable		Annualized		(Per SF)		Percent
	Center/Property	Location	Code		(1)		Interest			Redeveloped		Acquired		Interest		Area (SF)		Base Rent		(2)		Leased		Anchor Tenants (Lease Expiration)

58	Denver, CO	Centennial Promenade 9555 E. County Line Road		80223		SC		Fee			1997/2002		1997		100%		408,337	$	6,686,007	$	16.37		100%	Golfsmith Golf Center (2007), Soundtrack (2017), Ross Dress for Less (2008), OfficeMax (2012), Michael’s (2007), Toys ’R Us (2011), Borders (2017), Loehmann’s (2012), Home Depot (Not Owned), Recreational Equipment (Not Owned)
59	Denver, CO	University Hills 2730 South Colorado Boulevard		80222		SC		Fee			1997		2003		100%		244,383	$	3,663,312	$	16.10		93.1%	Linens ’N Things (2013), Pier 1 Imports (2014), OfficeMax (2012), King Soopers/Krogers (2017)
60	Fort Collins, CO	Mulberry and Lemay Crossings Mullberry Street and S. Lemay Avenue		80525		SC		Fee			2004		2003		100%		18,988	$	420,764	$	22.16		100%	Wal-Mart (Not Owned), Home Depot (Not Owned)
61	Littleton, CO	Aspen Grove 7301 South Santa Fe		80120		LC		Fee			2002		1*		100%		228,050	$	6,509,649	$	28.01		95.3%	Coldwater Creek (2011), Talbots (2012), Ann Taylor (2012), J. Crew (2012), Banana Republic (2012), Gap (2012), Williams-Sonoma (2014), J. Jill (2012), Bombay Company (2012), Pottery Barn (2014), Pier 1 Imports (2011), Jospeh A. Bank Clothiers (2012), Buca di Beppo (2013), Champps (2022)
62	Parker, CO	Flatacres Marketcenter South Parker Road		80134		SC		GL			2003		1*		100%		116,644	$	2,020,935	$	14.75		100%	Bed Bath & Beyond (2014), Gart Sports (2014), Michael’s (2013), Kohl’s (Not Owned)
63	Parker, CO	Parker Pavilions 11153-11183 South Parker Road		80134		SC		Fee	(3)		2003		2003		14.5%		89,631	$	1,686,143	$	17.92		98.7%	Office Depot (2016), Home Depot (Not Owned), Wal-Mart (Not Owned)
	Connecticut

64	Plainville, CT	Connecticut Commons I-84 & Route 9		06062		SC		Fee	(3)		1999/2001		1*		14.5%		463,394	$	6,537,419	$	11.91		100%	Lowe’s (2019), Kohl’s (2022), DSW Shoe Warehouse (2015), Dick’s Sporting Goods (2020), PETsMART (2015), A.C. Moore (2014), Old Navy (2011), Levitz Furniture (2015), Linens ’N Things (2017), Plainville Theatre (Not Owned)
	Florida

65	Bayonet Point, FL	Point Plaza US 19 & SR 52		34667		SC		Fee			1985/2003		1/2		100%		209,720	$	1,353,215	$	6.45		100%	Publix Super Markets (2010), Beall’s (2014), T.J. Maxx (2010)
66	Boynton Bay, FL	Meadows Square Hypoluxo Road and N. Congress Avenue		33461		SC		Fee			1986		2004		100%		106,224	$	1,454,787	$	13.85		98.9%	Publix Super Markets (2011)
67	Brandon, FL	K-Mart Shopping Center 1602 Brandon Boulevard		33511		SC		GL			1972/1997/ 2003		2*		100%		161,900	$	777,663	$	3.58		100%	K-Mart (2007), Kane Furniture (Not Owned)

Developers Diversified Realty Corporation

Shopping Center Property List at December 31, 2005


																Company-
																Owned				Average
					Type of					Year				DDR		Gross		Total		Base Rent
			Zip		Property		Ownership			Developed/		Year		Ownership		Leasable		Annualized		(Per SF)		Percent
	Center/Property	Location	Code		(1)		Interest			Redeveloped		Acquired		Interest		Area (SF)		Base Rent		(2)		Leased		Anchor Tenants (Lease Expiration)

68	Brandon, FL	Lake Brandon Plaza Causeway Boulevard		33511		SC		Fee	(3)		1999		2003		14.5%		148,267	$	1,865,859	$	11.51		100%	CompUSA (2017), Jo-Ann Fabrics (2017), Publix Super Markets (2019), Babies ’R Us (Not Owned)
69	Brandon, FL	Lake Brandon Village Causeway Boulevard		33511		SC		Fee	(3)		1997/2004		2003		14.5%		113,986	$	1,483,048	$	13.01		100%	Linens ’N Things (2014), Sports Authority (2018), PETsMART (2020), Lowe’s (Not Owned)
70	Crystal River, FL	Crystal River Plaza 420 Sun Coast Highway		33523		SC		Fee			1986/2001		1/2		100%		160,135	$	995,432	$	6.22		100%	Beall’s (2012), Beall’s Outlet (2006), Technology Conservation Group (2006)
71	Daytona Beach, FL	Volusia 1808 W. International Speedway		32114		SC		Fee			1984		2001		100%		76,087	$	831,585	$	12.55		87.1%	Marshall’s (2010)
72	Englewood, FL	Rotonda Plaza 5855 Placida Road		34224		SC		Fee			1991		2004		100%		46,835	$	467,280	$	9.98		100%	Kash ’N Karry (2011)
73	Gulf Breeze, FL	Gulf Breeze Marketplace 3749-3767 Gulf Breeze Parkway		32561		SC		Fee			1998		2003		100%		29,827	$	476,494	$	15.98		100%	Lowe’s (Not Owned), Wal-Mart (Not Owned)
74	Jacksonville, FL	Jacksonville Regional 3000 Dunn Avenue		32218		SC		Fee			1988		1995		100%		219,735	$	1,342,364	$	6.55		93.3%	J.C. Penney (2007), Winn Dixie Stores (2009)
75	Jacksonville, FL	Arlington Road Plaza 926 Arlington Road		32211		SC		Fee			1990/1999		2004		100%		182,098	$	986,608	$	6.80		79.7%	Food Lion (2010)
76	Lakeland, FL	Highlands Plaza Shopping Center 2228 Lakelands Highland Road		33803		SC		Fee			1990		2004		100%		102,572	$	809,387	$	8.45		93.4%	Winn Dixie (2017)
77	Marianna, FL	The Crossroads 2814-2822 Highway 71		32446		SC		Fee			1990		1/2		100%		63,894	$	341,984	$	5.61		95.4%	Beall’s (2008), Wal-Mart (Not Owned)
78	Naples, FL	Carillon Place 5010 Airport Road North		33942		SC		Fee	(3)		1994		1995		14.5%		267,808	$	3,037,208	$	11.69		97.1%	Winn Dixie (2014), T.J. Maxx (2009), Circuit City (2015), Ross Dress for Less (2010), Circuit City (2015), OfficeMax (2010)
79	Ocala, FL	Ocala West 2400 SW College Road		32674		SC		Fee			1991		2003		100%		40,975	$	376,505	$	9.19		100%	Sports Authority (2012)
80	Orange Park, FL	The Village Shopping Center 950 Blanding Boulevard		32065		SC		Fee			1993/2000		2004		100%		72,531	$	683,337	$	9.42		100%	Beall’s Dept Store (2009), Albertson’s (Not Owned)
81	Ormond Beach, FL	Ormond Towne Square 1458 West Granada Boulevard		32174		SC		Fee			1993		1994		100%		234,042	$	1,955,634	$	8.70		96.1%	Beall’s (2018), Ross Dress for Less (2016), Publix Super Markets (2013)
82	Oviedo, FL	Oviedo Park Crossing Route 417 & Red Bug Lake Road		32765		SC		Fee	(3)		1999		1*		20%		186,212	$	1,982,058	$	10.64		100%	OfficeMax (2014), Ross Dress for Less (2010), Michael’s (2009), T.J. Maxx (2010), Linens ’N Things (2011), Lowe’s (Not Owned)
83	Palm Harbor, FL	The Shoppes of Boot Ranch 300 East Lake Road		34685		SC		Fee			1990		1995		100%		52,395	$	938,476	$	17.91		100%	Albertson’s (Not Owned), Target (Not Owned)
84	Pensacola, FL	Palafox Square 8934 Pensacola Boulevard		32534		SC		Fee			1988/1997/ 1999		1/2		100%		17,150	$	208,630	$	14.14		86%	Wal-Mart (Not Owned)
85	Spring Hill, FL	Mariner Square 13050 Cortez Boulevard		34613		SC		Fee			1988/1997		1/2		100%		188,924	$	1,579,400	$	8.13		99.5%	Beall’s (2006), Ross Dress for Less (2014), Wal-Mart (Not Owned)

Developers Diversified Realty Corporation

Shopping Center Property List at December 31, 2005


																Company-
																Owned				Average
					Type of					Year				DDR		Gross		Total		Base Rent
			Zip		Property		Ownership			Developed/		Year		Ownership		Leasable		Annualized		(Per SF)		Percent
	Center/Property	Location	Code		(1)		Interest			Redeveloped		Acquired		Interest		Area (SF)		Base Rent		(2)		Leased		Anchor Tenants (Lease Expiration)

86	Tallahassee, FL	Capital West 4330 West Tennessee Street		32312		SC		Fee			1994/2004		2003		100%		58,386	$	436,132	$	7.68		97.3%	Beall’s Outlet (2009), Wal-Mart (Not Owned)
87	Tampa, FL	North Pointe Plaza 15001-15233 North Dale Mabry		33618		SC		Fee	(3)		1990		1/2		20%		104,460	$	1,293,713	$	12.38		100%	Publix Super Markets (2010), Wal- Mart (Not Owned)
88	Tampa, FL	Horizon Park Shopping Center 3908 West Hillsborough Highway		33614		SC		Fee			1987/2003		2004		100%		216,284	$	1,739,536	$	9.88		81.4%	Northern Tool (2015), Babies ’R Us (2008), Pearl Artist & Craft Supply (2007)
89	Tampa, FL	Town N’ Country 7021-7091 West Waters Avenue		33634		SC		Fee			1990		1/2		100%		134,366	$	991,314	$	7.81		94.5%	Beall’s (2005), Kash ’N Karry (2010), Wal-Mart (Not Owned)
90	Tarpon Springs, FL	Tarpon Square 41232 U.S. 19, North		34689		SC		Fee			1974/1998		1/2		100%		198,797	$	1,327,843	$	6.61		97.1%	K-Mart (2009), Big Lots (2007), Staples (2013)
91	West Pasco, FL	Pasco Square 7201 Country Road 54		34653		SC		Fee			1986		1/2		100%		135,421	$	883,247	$	6.95		93.8%	Beall’s Outlet (2013), Publix Super Markets (2006), Plymouth Blimpie, Inc. (2006), Wal-Mart (Not Owned)
	Georgia

92	Athens, GA	Athens East 4375 Lexington Road		30605		SC		Fee			2000		2003		100%		24,000	$	339,168	$	14.88		95%	Wal-Mart (Not Owned)
93	Atlanta, GA (Duluth)	Pleasant Hill Plaza 1630 Pleasant Hill Road		30136		SC		Fee			1990		1994		100%		99,025	$	1,041,777	$	12.43		84.6%	Office Depot (2007), Wal-Mart (Not Owned)
94	Atlanta, GA	Perimeter Pointe 1155 Mt. Vernon Highway		30136		SC		Fee	(3)		1995/2002		1995		14.5%		343,155	$	5,403,470	$	15.00		100%	Stein Mart (2010), Babies ’R Us (2007), Sports Authority (2012), L.A. Fitness Sports Clubs (2016), Office Depot (2012), St. Joseph’s Hospital/ Atlanta (2006), United Artists Theatre (2015)
95	Canton, GA	Riverplace 104-150 Riverstone Parkway		30114		SC		Fee			1983		2003		100%		127,853	$	938,571	$	7.56		97.2%	Staples (2014), Ingles (2019)
96	Cartersville, GA	Felton’s Crossing 877 Joe Frank Harris Parkway S		30120		SC		Fee			1984		2003		100%		112,240	$	828,888	$	7.64		96.6%	Ross Dress for Less (2013), Ingles (2020)
97	Chamblee, GA	Chamblee Plaza Peachtree Industrial Boulevard		30341		SC		Fee			1976		2003		100%		175,969	$	989,901	$	10.78		52.2%
98	Columbus, GA	Bradley Park Crossing 1591 Bradley Park Drive		31904		SC		Fee			1999		2003		100%		119,786	$	1,186,364	$	10.93		90.6%	Goody’s (2011), PETsMART (2015), Michael’s (2009), Target (Not Owned)
99	Cumming, GA	Cumming Marketplace Marketplace Boulevard		30041		SC		Fee			1997/1999		2003		100%		308,557	$	3,705,139	$	11.56		99.6%	Goody’s (2012), Lowe’s (2019), Michael’s (2010), OfficeMax (2013), Home Depot (Not Owned), Wal-Mart (Not Owned)
100	Douglasville, GA	Douglasville Marketplace 6875 Douglas Boulevard		30135		SC		Fee			1999		2003		100%		86,158	$	1,422,817	$	10.21		100%	Best Buy (2015), Babies ’R Us (2011), Lowe’s (Not Owned)
101	Ft. Oglethorpe, GA	Fort Oglethorpe Marketplace 101 Battlefield Parkway		30742		SC		Fee			1992		2003		100%		176,903	$	673,334	$	4.08		93.3%	Dollar General (2015), K-Mart (2007)
102	Lafayette, GA	Lafayette Center 1109 North Main Street		30728		SC		Fee			1990		2003		100%		75,622	$	471,149	$	6.83		87.8%	Farmers Furniture (2009), Food Lion (2019)

Developers Diversified Realty Corporation

Shopping Center Property List at December 31, 2005


																Company-
																Owned				Average
					Type of					Year				DDR		Gross		Total		Base Rent
			Zip		Property		Ownership			Developed/		Year		Ownership		Leasable		Annualized		(Per SF)		Percent
	Center/Property	Location	Code		(1)		Interest			Redeveloped		Acquired		Interest		Area (SF)		Base Rent		(2)		Leased		Anchor Tenants (Lease Expiration)

103	Lawrenceville, GA	Five Forks Village 850 Mall Parkway		30044		SC		Fee	(3)		1990		2003		10%		89,064	$	613,592	$	15.66		44%
104	Lilburn, GA	Five Forks Crossing 3055 Five Forks Trickum Road		30047		SC		Fee	(3)		2000/2001		2003		10%		73,950	$	657,819	$	9.23		96.4%	Kroger (2012)
105	Lithonia, GA	The Shoppes at Turner Hill 8200 Mall Parkway		30038		SC		Fee			2004		2003		100%		98,175	$	1,416,133	$	12.79		100%	Best Buy (2018), Bed Bath & Beyond (2013), Toys ’R Us (Not Owned), Sam’s Club (Not Owned)
106	Loganville, GA	Midway Plaza 910 Athens Highway		30052		SC		Fee	(3)		1995		2003		20%		91,196	$	966,928	$	10.94		96.9%	Kroger (2016)
107	Madison, GA	Beacon Heights 1462-1532 Eatonton Road		30650		SC		Fee			1989		2003		100%		105,849	$	499,066	$	4.84		97.4%	Ingles (2010), Wal-Mart (2009)
108	Marietta, GA	Town Center Prado 26089 Bells Ferry Road		30066		SC		Fee	(3)		1995/2002		1995		14.5%		301,297	$	3,840,958	$	12.78		98.2%	Stein Mart (2007), Ross Dress for Less (2013), Publix Super Markets (2015), Bally Fitness Center (2011)
109	McDonough, GA	McDonough Marketplace (LP-II) NE Corner 175 & Highway 20		30253		SC		Fee	(3)		2003		2003		14.5%		30,500	$	571,525	$	14.64		100%	Lowe’s (Not Owned), Wal-Mart (Not Owned)
110	Newnan, GA	Newnan Crossing 955-1063 Bullsboro Drive		30264		SC		Fee			1995		2003		100%		156,497	$	1,246,300	$	8.04		97.7%	Lowe’s (2015), Belk (Not Owned), Wal-Mart (Not Owned)
111	Stockbridge, GA	Freeway Junction 3797-3879 Highway 138 SE		30281		SC		Fee			1988		2003		100%		162,778	$	537,815	$	5.61		58.9%	Ingles (2009), Northern Tool (2015)
112	Stockbridge, GA	Pike Nurseries-Stockbridge 599 Highway 138 W		30281		SC		Fee			1997		2003		100%		0	$	244,145	$	0.00		100%
113	Stone Mountain, GA	Rivercliff Village Stone Mountain Highway		30047		SC		Fee			1999		2003		100%		2,000	$	46,200	$	23.10		100%
114	Suwanee, GA	Johns Creek Towne Park 3630 Peachtree Parkway		30024		SC		Fee			2001/2004		2003		100%		284,626	$	3,774,975	$	13.43		98.8%	Borders (2020), PETsMART (2020), Kohl’s (2022), Michael’s (2011), Staples (2016), Shoe Gallery (2014)
115	Tucker, GA	Cofer Crossing 4349-4375 Lawrenceville Highway		30084		SC		Fee			1998/2003		2003		100%		130,832	$	1,187,122	$	8.80		97.0%	Goody’s (2014), Kroger (2019), Wal-Mart (Not Owned)
116	Union City, GA	Shannon Square 4720 Jonesboro Road		30291		SC		Fee			1986		2003		100%		100,002	$	663,067	$	7.37		90.0%	Ingles (2006), Wal-Mart (Not Owned)
117	Warner Robbins, GA	Warner Robins Place 2724 Watson Boulevard		31093		SC		Fee			1997		2003		100%		107,941	$	1,250,571	$	11.27		96.7%	T.J. Maxx (2010), Staples (2016), Lowe’s (Not Owned), Wal-Mart (Not Owned)
118	Woodstock, GA	Woodstock Place 10029 Highway 928		30188		SC		GL			1995		2003		100%		170,940	$	1,237,938	$	8.22		88.1%	Wal-Mart (2020)
	Idaho

119	Idaho Falls, ID	Country Club Mall 1515 Northgate Mile		83401		SC		Fee			1976/1992/ 1997		1998		100%		148,593	$	822,317	$	6.57		84.3%	OfficeMax (2011), World Gym (2008), Fred Meyer, Inc. (Not Owned)

Developers Diversified Realty Corporation

Shopping Center Property List at December 31, 2005


																Company-
																Owned				Average
					Type of					Year				DDR		Gross		Total		Base Rent
			Zip		Property		Ownership			Developed/		Year		Ownership		Leasable		Annualized		(Per SF)		Percent
	Center/Property	Location	Code		(1)		Interest			Redeveloped		Acquired		Interest		Area (SF)		Base Rent		(2)		Leased		Anchor Tenants (Lease Expiration)

120	Meridian, ID	Meridian Crossroads Eagle and Fairview Road		83642		SC		Fee		1999/2001/ 2002/2003/ 2004			1*		100%		459,719	$	6,128,444	$	12.13		100%	Bed Bath & Beyond (2011), Old Navy (2010), Shopko Stores, Inc. (2020), Office Depot (2010), Ross Dress for Less (2012), Marshall’s (2012), Sportsman’s Warehouse (2015), Craft Warehouse (2013), Babies ’R Us (Not Owned), Wal-Mart (Not Owned)
	Illinois

121	Decatur, IL	Decatur Marketplace Maryland Street		62521		SC		Fee			1999		2003		100%		22,775	$	255,870	$	12.75		88.1%	Wal-Mart (Not Owned)
122	Deer Park, IL	Deer Park Town Center 20530 North Rand Road #303		60010		LC		Fee	(3)		2000/2004		1*		24.75%		286,889	$	8,242,358	$	27.66		95.3%	Gap (2010), Barnes & Noble (Not Owned), Century Cinemas (Not Owned), Pier 1 Imports (201), Banana Republic (2010), Abercrombie & Fitch (2005), Pottery Barn Kids (2012), Pottery Barn (2013), Restoration Hardware (2010), Eddie Bauer Home (2011), Eddie Bauer Sportswear (2011), Coldwater Creek (2010), J. Crew (2011), Ann Taylor (2011), Talbots/ Talbots Petites (2011), Williams-Sonoma (2013), Joseph A. Bank Clothiers (2011), California Pizza Kitchen (2013), Bath And Body Works (2011), J. Jill (2013)
123	Harrisburg, IL	Arrowhead Point 701 North Commercial		62946		SC		Fee			1991		1994		100%		167,074	$	826,983	$	5.36		92.4%	Wal-Mart Stores (2011), Mad Pricers (2011)
124	Kildeer, IL	The Shops at Kildeer 20505 North Highway 12		60047		SC		Fee	(3)		2001		2001		100%		161,770	$	3,158,415	$	18.84		100%	Bed Bath & Beyond (2012), Circuit City (2017), Old Navy (2006)
125	Mount Vernon, IL	Times Square Mall 42nd and Broadway		62864		MM		Fee			1974/1998/ 2000		2*		100%		269,328	$	984,535	$	4.23		82.2%	Sears (2013), Goody’s (2015), J.C. Penney (2007)
126	Orlando Park, IL	Home Depot Center 15800 Harlem Avenue		60462		SC		Fee			1987/1993		2004		100%		149,498	$	1,494,643	$	10.25		97.6%	Home Depot (2012)
127	Schaumburg, IL	Woodfield Village Green 1430 East Golf Road		60173		SC		Fee	(3)		1993/1998/ 2002		1995		14.5%		508,815	$	8,463,498	$	16.63		100%	Circuit City (2009), Off 5th (2011), PETsMART (2014), Homegoods (2014), OfficeMax (2010), Container Store (2011), Filene’s Basement (2014), Marshall’s (2009), Nordstrom Rack (2009), Borders (2009), Expo Design Center (2019), Costco (Not Owned), Prairie Rock Restaurant (Not Owned)

Developers Diversified Realty Corporation

Shopping Center Property List at December 31, 2005


																Company-
																Owned				Average
					Type of					Year				DDR		Gross		Total		Base Rent
			Zip		Property		Ownership			Developed/		Year		Ownership		Leasable		Annualized		(Per SF)		Percent
	Center/Property	Location	Code		(1)		Interest			Redeveloped		Acquired		Interest		Area (SF)		Base Rent		(2)		Leased		Anchor Tenants (Lease Expiration)

	Indiana

128	Bedford, IN	Town Fair Center 1320 James Avenue		47421		SC		Fee			1993/1997		2*		100%		223,431	$	1,316,813	$	6.05		97.5%	K-Mart (2008), Goody’s (2008), J.C. Penney (2008), Buehler’s Buy Low (2010)
129	Highland, IN	Highland Grove Shopping Center Highway 41 & Main Street		46322		SC		Fee	(3)		1995/2001		1996		20%		312,546	$	3,432,173	$	10.98		100%	Marshall’s (2011), Kohl’s (2016), Circuit City (2016), OfficeMax (2012), Target (Not Owned), Jewel (Not Owned), Borders (Not Owned)
130	Lafayette, IN	Park East Marketplace 4205-4315 Commerce Drive		47905		SC		Fee			2000		2003		100%		35,100	$	394,373	$	13.89		80.9%	Wal-Mart (Not Owned)
	Iowa

131	Cedar Rapids, IA	Northland Square 303-367 Collins Road, NE		52404		SC		Fee			1984		1998		100%		187,068	$	1,858,809	$	9.94		100%	T.J. Maxx (2010), OfficeMax (2010), Barnes & Noble (2010), Kohl’s (2021)
132	Ottumwa, IA	Quincy Place Mall 1110 Quincy Avenue		52501		MM		Fee			1990/1999/ 2002		1/2		100%		241,427	$	1,545,944	$	6.86		93.3%	Herberger’s (2020), J.C. Penney (2010), OfficeMax (2015), Goody’s (2014), Target (Not Owned)
	Kansas

133	Leawood, KS	Town Center Plaza 5000 W 119 Street		66209		LC		Fee			1996/2002		1998		100%		291,459	$	7,185,766	$	25.08		95.3%	Barnes & Noble (2011), Coldwater Creek (2009), Limited/ Limited Too (2009), Victoria’s Secret (2009), Express/ Bath&Body/ Structure (2009), Gap/Gap Body(2008), Gap Kids (2005), J. Jill (2013), Pottery Barn (2009), Williams-Sonoma (2009), American Eagle (2013), Pacific Sunwear (2012), Bravo Cucina Italiana (2013), Restoration Hardware (2012), Houlihans (2025), Bristol Seafood Bar & Grill (2011), Bombay Company (2006)
134	Merriam, KS	Merriam Town Center 5700 Antioch Road		66202		SC		Fee	(3)		1998/2004		1*		14.5%		351,234	$	4,110,546	$	11.91		98.2%	OfficeMax (2013), PETsMART (2019), Hen House (2018), Marshall’s (2008), Dick’s Sporting Goods (2016), Cinemark (2018), Home Depot (Not Owned)
135	Olathe, KS	Devonshire Village 127th Street & Mur-Len Road		66062		SC		Fee	(3)		1987		1998		24.75%		48,802	$	333,835	$	9.82		69.6%
136	Overland Park, KS	Cherokee North Shopping Center 8800-8934 W 95th Street		66212		SC		Fee	(3)		1987/2002		1998		24.75%		60,765	$	759,719	$	13.89		88.9%
137	Overland Park, KS	Overland Pointe Marketplace Inter 135th & Antioch Road		66213		SC		Fee			2001/2004		2003		100%		35,025	$	755,154	$	16.99		100%	Home Depot (Not Owned), Sam’s Club (Not Owned), Babies ’R Us (Not Owned)

Developers Diversified Realty Corporation

Shopping Center Property List at December 31, 2005

Company-

Owned

Average

Type of

Year

DDR

Gross

Total

Base Rent

Zip

Property

Ownership

Developed/

Year

Ownership

Leasable

Annualized

(Per SF)

Percent

Center/Property

Location

Code

(1)

Interest

Redeveloped

Acquired<

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		appreciation potential where the Company’s financial strength, relationships with retailers and management capabilities can enhance value;

	•	Increase cash flows and property values by continuing to take advantage of attractive financing and refinancing opportunities (see “Recent Developments — Financings”);

	•	Increase per share cash flows through the strategic disposition of low growth assets and utilizing the proceeds to repay debt, invest in other real estate assets and/or developments;

	•	Selectively develop the Company’s undeveloped parcels or new sites in areas with attractive demographics;

	•	Hold properties for long-term investment and place a strong emphasis on regular maintenance, periodic renovation and capital improvements, and

	•	Continue to manage and develop the properties of others to generate fee income, subject to restrictions imposed by federal income tax laws, and create opportunities for acquisitions.