10-Q

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

Form 10-Q

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

For the quarterly period ended March 31, 2011

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)

(Former name, former address and former fiscal year, if changed since last report)

     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 whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes þ No o

     Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer þ	Accelerated filer o	Non-accelerated filer o	Smaller reporting company o
		(Do not check if smaller reporting company)

     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

     As of April 29, 2011, the registrant had 276,623,299 outstanding common shares, $0.10 par value per share.

PART I
FINANCIAL INFORMATION

Item 1. FINANCIAL STATEMENTS — Unaudited
Condensed Consolidated Balance Sheets as of March 31, 2011 and December 31, 2010.	2
Condensed Consolidated Statements of Operations for the Three-Month Periods Ended March 31, 2011 and 2010.	3
Condensed Consolidated Statements of Cash Flows for the Three-Month Periods Ended March 31, 2011 and 2010.	4
Notes to Condensed Consolidated Financial Statements.	5
EX-4.1
EX-31.1
EX-31.2
EX-32.1
EX-32.2
EX-101 INSTANCE DOCUMENT
EX-101 SCHEMA DOCUMENT
EX-101 CALCULATION LINKBASE DOCUMENT
EX-101 LABELS LINKBASE DOCUMENT
EX-101 PRESENTATION LINKBASE DOCUMENT
EX-101 DEFINITION LINKBASE DOCUMENT

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DEVELOPERS DIVERSIFIED REALTY CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(Dollars in thousands, except share amounts)

(Unaudited)

	March 31, 2011			December 31, 2010
Assets
Land	$	1,865,716		$	1,837,403
Buildings		5,551,683			5,491,489
Fixtures and tenant improvements		356,104			339,129
		7,773,503			7,668,021
Less: Accumulated depreciation		(1,500,524	)		(1,452,112	)
		6,272,979			6,215,909
Land held for development and construction in progress		714,972			743,218
Real estate held for sale, net		6,427			—
Total real estate assets, net		6,994,378			6,959,127
Investments in and advances to joint ventures		402,875			417,223
Cash and cash equivalents		21,025			19,416
Restricted cash		4,148			4,285
Notes receivable, net		121,335			120,330
Other assets, net		237,769			247,709
	$	7,781,530		$	7,768,090
Liabilities and Equity
Unsecured indebtedness:
Senior notes	$	2,345,533		$	2,043,582
Revolving credit facilities		42,681			279,865
		2,388,214			2,323,447
Secured indebtedness:
Term loan		550,000			600,000
Mortgage and other secured indebtedness		1,331,795			1,378,553
		1,881,795			1,978,553
Total indebtedness		4,270,009			4,302,000
Accounts payable and accrued expenses		119,775			127,715
Dividends payable		18,409			12,092
Equity derivative liability — affiliate		—			96,237
Other liabilities		85,688			95,359
Total liabilities		4,493,881			4,633,403
Commitments and contingencies (Note 8)
Developers Diversified Realty Corporation Equity:
Class G — 8.0% cumulative redeemable preferred shares, without par value, $250 liquidation value; 750,000 shares authorized; 720,000 shares issued and outstanding at March 31, 2011 and December 31, 2010		180,000			180,000
Class H — 7.375% cumulative redeemable preferred shares, without par value, $500 liquidation value; 750,000 shares authorized; 410,000 shares issued and outstanding at March 31, 2011 and December 31, 2010		205,000			205,000
Class I — 7.5% cumulative redeemable preferred shares, without par value, $500 liquidation value; 750,000 shares authorized; 340,000 shares issued and outstanding at March 31, 2011 and December 31, 2010		170,000			170,000
Common shares, with par value, $0.10 stated value; 500,000,000 shares authorized; 267,133,800 and 256,267,750 shares issued at March 31, 2011 and December 31, 2010, respectively		26,714			25,627
Paid-in capital		4,004,030			3,868,990
Accumulated distributions in excess of net income		(1,365,039	)		(1,378,341	)
Deferred compensation obligation		12,571			14,318
Accumulated other comprehensive income		27,707			25,646
Less: Common shares in treasury at cost: 612,927 and 712,310 shares at March 31, 2011 and December 31, 2010, respectively		(12,320	)		(14,638	)
Total DDR shareholders’ equity		3,248,663			3,096,602
Non-controlling interests		38,986			38,085
Total equity		3,287,649			3,134,687
	$	7,781,530		$	7,768,090

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.

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DEVELOPERS DIVERSIFIED REALTY CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE THREE-MONTH PERIODS ENDED MARCH 31,

(Dollars in thousands, except per share amounts)

(Unaudited)

	2011			2010
Revenues from operations:
Minimum rents	$	134,291		$	133,746
Percentage and overage rents		2,038			2,041
Recoveries from tenants		46,614			46,370
Fee and other income		20,041			19,974
		202,984			202,131
Rental operation expenses:
Operating and maintenance		38,104			34,385
Real estate taxes		26,841			27,400
Impairment charges		3,856			817
General and administrative		29,378			23,275
Depreciation and amortization		56,042			55,177
		154,221			141,054
Other income (expense):
Interest income		2,796			1,333
Interest expense		(60,243	)		(56,096	)
Gain on debt retirement, net		—			1,091
Gain (loss) on equity derivative instruments		21,926			(24,868	)
Other income (expense), net		1,341			(3,059	)
		(34,180	)		(81,599	)
Income (loss) before earnings from equity method investments and other items		14,583			(20,522	)
Equity in net income of joint ventures		1,974			1,647
Impairment of joint venture investments		(35	)		—
Gain on change in control of interests		21,729			—
Income (loss) before tax expense of taxable REIT subsidiaries and state franchise and income taxes		38,251			(18,875	)
Tax expense of taxable REIT subsidiaries and state franchise and income taxes		(326	)		(1,002	)
Income (loss) from continuing operations		37,925			(19,877	)
Loss from discontinued operations		(1,685	)		(6,033	)
Income (loss) before loss on disposition of real estate		36,240			(25,910	)
Loss on disposition of real estate, net of tax		(861	)		(675	)
Net income (loss)	$	35,379		$	(26,585	)
Non-controlling interests		(67	)		2,338
Net income (loss) attributable to DDR	$	35,312		$	(24,247	)
Preferred dividends		(10,567	)		(10,567	)
Net income (loss) attributable to DDR common shareholders	$	24,745		$	(34,814	)
Per share data:
Basic earnings per share data:
Income (loss) from continuing operations attributable to DDR common shareholders	$	0.10		$	(0.14	)
Loss from discontinued operations attributable to DDR common shareholders		—			(0.01	)
Net income (loss) attributable to DDR common shareholders	$	0.10		$	(0.15	)
Diluted earnings per share data:
Income (loss) from continuing operations attributable to DDR common shareholders	$	0.02		$	(0.14	)
Loss from discontinued operations attributable to DDR common shareholders		(0.01	)		(0.01	)
Net income (loss) attributable to DDR common shareholders	$	0.01		$	(0.15	)

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.

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DEVELOPERS DIVERSIFIED REALTY CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE THREE-MONTH PERIODS ENDED MARCH 31,

(Dollars in thousands)

(Unaudited)

	2011			2010
Net cash flow provided by operating activities:	$	60,373		$	44,304
Cash flow from investing activities:
Real estate developed or acquired, net of liabilities assumed		(43,062	)		(37,599	)
Equity contributions to joint ventures		(832	)		(729	)
Repayments of (advances to) joint venture advances, net		22,516			(82	)
Distributions of proceeds from sale and refinancing of joint venture interests		1,656			—
Return on investments in joint ventures		2,072			8,129
Issuance of notes receivable, net		(373	)		(2,352	)
Decrease in restricted cash		137			37,891
Proceeds from disposition of real estate		11,659			29,429
Net cash flow (used for) provided by investing activities:		(6,227	)		34,687
Cash flow from financing activities:
Repayments of revolving credit facilities, net		(242,766	)		(426,663	)
Repayment of senior notes		—			(147,706	)
Proceeds from issuance of senior notes, net of underwriting commissions and offering expenses of $350 and $400 in 2011 and 2010, respectively		295,495			296,785
Proceeds from mortgages and other secured debt		121,861			1,416
Repayment of term loans and mortgage debt		(268,012	)		(169,458	)
Payment of debt issuance costs		(1,471	)		(138	)
Proceeds from issuance of common shares, net of underwriting commissions and issuance costs of $1,400 in 2010		—			382,762
Proceeds from issuance of common shares related to the exercise of warrants		59,873			—
Repurchase of common shares in conjunction with the exercise of stock options and dividend reinvestment plan		(1,626	)		(260	)
Contributions from non-controlling interests		94			50
Distributions to non-controlling interests and redeemable operating partnership units		(374	)		(1,622	)
Dividends paid		(15,692	)		(14,585	)
Net cash flow used for financing activities		(52,618	)		(79,419	)
Cash and cash equivalents
Increase (decrease) in cash and cash equivalents		1,528			(428	)
Effect of exchange rate changes on cash and cash equivalents		81			4
Cash and cash equivalents, beginning of period		19,416			26,172
Cash and cash equivalents, end of period	$	21,025		$	25,748

Supplemental disclosure of non-cash investing and financing activities:

     At March 31, 2011, dividends payable were $18.4 million. In conjunction with the acquisition of its partners’ interests in two shopping centers during the three-month period ended March 31, 2011 (Note 3), the Company reversed its previously held equity interest by increasing investments in and advances to joint ventures by approximately $6.8 million as the investment basis was negative, increased net real estate assets by approximately $36.6 million for its previously held proportionate share of the assets, and assumed debt of approximately $50.1 million. In addition, in March 2011, warrants were exercised for an aggregate of 10 million common shares. The equity derivative liability — affiliate of $74.3 million was reclassified from liabilities to additional paid-in capital upon exercise. The foregoing transactions did not provide for or require the use of cash for the three-month period ended March 31, 2011.

     At March 31, 2010, dividends payable were $12.0 million. The Company deconsolidated one entity in connection with the adoption of the consolidation rules effective January 1, 2010. This resulted in a reduction to real estate assets, net, of approximately $28.7 million, an increase to investments in and advances to joint ventures of approximately $8.4 million, a reduction in non-controlling interests of approximately $12.4 million and an increase to accumulated distributions in excess of net income of approximately $7.8 million. In addition, the Company foreclosed on its interest in a note receivable collateralized by a development project resulting in an increase to real estate assets and a decrease to notes receivable of approximately $19.0 million. The foregoing transactions did not provide for or require the use of cash for the three-month period ended March 31, 2010.

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.

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DEVELOPERS DIVERSIFIED REALTY CORPORATION

Notes to Condensed Consolidated Financial Statements

1. NATURE OF BUSINESS AND FINANCIAL STATEMENT PRESENTATION

     Developers Diversified Realty Corporation and its related real estate joint ventures and subsidiaries (collectively, the “Company” or “DDR”) are primarily engaged in the business of acquiring, expanding, owning, developing, redeveloping, leasing, managing and operating shopping centers. Unless otherwise provided, references herein to the Company or DDR include Developers Diversified Realty Corporation, its wholly-owned and majority-owned subsidiaries and its consolidated and unconsolidated joint ventures.

     Principles of Consolidation

     The Company follows the provisions of Accounting Standards Codification No. 810, Consolidation (“ASC 810”). This standard requires a company to perform an analysis to determine whether its variable interests give it a controlling financial interest in a VIE. This analysis identifies the primary beneficiary of a VIE as the entity that has (a) the power to direct the activities of the VIE that most significantly affect the VIE’s economic performance and (b) the obligation to absorb losses or the right to receive benefits that could potentially be significant to the VIE. In determining whether it has the power to direct the activities of the VIE that most significantly affect the VIE’s performance, this standard requires a company to assess whether it has an implicit financial responsibility to ensure that a VIE operates as designed.

     At March 31, 2011 and December 31, 2010, the Company’s investments in consolidated real estate joint ventures in which the Company is deemed to be the primary beneficiary have total real estate assets of $383.1 million and $374.2 million, respectively, mortgages of $42.0 million and $42.9 million, respectively, and other liabilities of $13.4 million and $13.7 million, respectively.

     Use of Estimates

     The preparation of financial statements in accordance with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates.

     Unaudited Interim Financial Statements

     These financial statements have been prepared by the Company in accordance with generally accepted accounting principles for interim financial information and the applicable rules and regulations of the Securities and Exchange Commission. Accordingly, they do not include all information and footnotes required by generally accepted accounting principles for complete financial statements. However, in the opinion of management, the interim financial statements include all adjustments, consisting of only normal recurring adjustments, necessary for a fair statement of the

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results of the periods presented. The results of operations for the three-month periods ended March 31, 2011 and 2010, are not necessarily indicative of the results that may be expected for the full year. These condensed consolidated financial statements should be read in conjunction with the Company’s audited financial statements and notes thereto included in the Company’s Form 10-K for the year ended December 31, 2010.

     Comprehensive Loss

     Comprehensive income (loss) is as follows (in thousands):

	Three-Month Periods
	Ended March 31,
	2011			2010
Net income (loss)	$	35,379		$	(26,585	)
Other comprehensive income (loss):
Settlement/change in fair value of interest-rate contracts		(1,785	)		3,468
Amortization of interest-rate contracts		(7	)		(93	)
Foreign currency translation		4,976			(11,902	)
Total other comprehensive income (loss)		3,184			(8,527	)
Comprehensive income (loss)	$	38,563		$	(35,112	)
Comprehensive (income) loss attributable to non-controlling interests		(1,190	)		3,810
Total comprehensive income (loss) attributable to DDR	$	37,373		$	(31,302	)

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2. INVESTMENTS IN AND ADVANCES TO JOINT VENTURES

     At March 31, 2011 and December 31, 2010, the Company had ownership interests in various unconsolidated joint ventures that had an investment in 232 and 258 shopping center properties, respectively. Condensed combined financial information of the Company’s unconsolidated joint venture investments is as follows (in thousands):

	March 31, 2011			December 31, 2010
Condensed Combined Balance Sheets
Land	$	1,550,786		$	1,566,682
Buildings		4,745,572			4,783,841
Fixtures and tenant improvements		158,031			154,292
		6,454,389			6,504,815
Less: Accumulated depreciation		(747,737	)		(726,291	)
		5,706,652			5,778,524
Land held for development and construction in progress		197,214			174,237
Real estate, net		5,903,866			5,952,761
Receivables, net		100,090			111,569
Leasehold interests		10,006			10,296
Other assets		517,696			303,826
	$	6,531,658		$	6,378,452
Mortgage debt	$	3,884,329		$	3,950,794
Notes and accrued interest payable to DDR		91,290			87,282
Other liabilities		205,306			186,728
		4,180,925			4,224,804
Accumulated equity		2,350,733			2,153,648
	$	6,531,658		$	6,378,452
Company’s share of accumulated equity	$	474,359		$	480,200

	Three-Month Periods
	Ended March 31,
	2011			2010
Condensed Combined Statements of Operations
Revenues from operations	$	172,398		$	164,093
Operating expenses		63,015			63,547
Depreciation and amortization		47,752			45,968
Interest expense		58,112			58,459
		168,879			167,974
Income (loss) before tax expense and discontinued operations		3,519			(3,881	)
Income tax expense (primarily Sonae Sierra Brasil), net		(6,144	)		(4,799	)
Loss from continuing operations		(2,625	)		(8,680	)
Discontinued operations:
(Loss) income from discontinued operations		(441	)		582
Loss on disposition of real estate, net of tax (A)		(863	)		(8,752	)
Net loss	$	(3,929	)	$	(16,850	)
Company’s share of equity in net income of joint ventures (B)	$	3,899		$	1,660

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(A)	Loss on disposition of discontinued operations includes the sale of two properties by two of the Company’s unconsolidated joint ventures in the first quarter of 2011. The Company’s proportionate share of the aggregate loss for the assets sold for the three-month period ended March 31, 2011, was approximately $1.9 million.
	Loss on disposition of discontinued operations includes the sale of 16 properties by one of the Company’s unconsolidated joint ventures in the first quarter of 2010. This disposition of assets resulted in a loss of $8.7 million for the three months ended March 31, 2010. The Company’s proportionate share of the loss on sale recorded in the first quarter of 2010 was approximately $1.3 million.
(B)	The difference between the Company’s share of net income, as reported above, and the amounts included in the condensed consolidated statements of operations is attributable to the amortization of basis differentials, deferred gains and differences in gain (loss) on sale of certain assets due to the basis differentials and other than temporary impairment charges. The Company is not recording income or loss from those investments in which the investment basis was written-off and the Company does not have the obligation or intent to fund any additional capital. The Company’s share of joint venture net income was reduced by $1.9 million for the three-month period ended March 31, 2011 as a result of these adjustments.

     Investments in and advances to joint ventures include the following items, which represent the difference between the Company’s investment and its share of all of the unconsolidated joint ventures’ underlying net assets (in millions):

	March 31,			December 31,
	2011			2010
Company’s share of accumulated equity	$	474.4		$	480.2
Basis differentials (A)		(159.8	)		(147.5	)
Deferred development fees, net of portion relating to the Company’s interest		(3.4	)		(3.4	)
Notes receivable from investments		0.4			0.6
Notes and accrued interest payable to DDR		91.3			87.3
Investments in and advances to joint ventures	$	402.9		$	417.2

(A) This amount represents the aggregate difference between the Company’s historical cost basis and the equity basis reflected at the joint venture level. Basis differentials recorded upon transfer of assets are primarily associated with assets previously owned by the Company that have been transferred into an unconsolidated joint venture at fair value. Other basis differentials occur primarily when the Company has purchased interests in existing unconsolidated joint ventures at fair market values, which differ from their proportionate share of the historical net assets of the unconsolidated joint ventures. In addition, certain acquisition, transaction and other costs, including capitalized interest and impairments of the Company’s investments that were other than temporary may not be reflected in the net assets at the joint venture level. Certain basis differentials indicated above are amortized over the life of the related assets.

     Service fees and income earned by the Company through management, acquisition, financing, leasing and development activities performed related to all of the Company’s unconsolidated joint ventures are as follows (in millions):

	Three-Month Periods
	Ended March 31,
	2011		2010
Management and other fees	$	7.3	$	9.2
Acquisition, financing and other fees		—		0.2
Development fees and leasing commissions		1.8		1.7
Interest income		0.1		0.1

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Sonae Sierra Brasil

     In February 2011, the Company’s unconsolidated joint venture, Sonae Sierra Brasil (BM&FBOVESPA: SSBR3), completed an initial public offering of its common shares on the Sao Paulo Stock Exchange. The total proceeds raised of approximately US$280 million from the initial public offering will be used primarily to fund future developments and expansions, as well as repay a loan from its parent company, in which DDR owns a 50% interest. The Company’s share of the loan repayment proceeds, which were received during the three months ended March 31, 2011, was approximately US$22.4 million. As a result of the initial public offering, the Company’s effective ownership interest in Sonae Sierra Brasil was reduced from 48% to approximately 33%.

Other Joint Venture Interests

     In the first quarter of 2011, the Company acquired its partners’ 50% ownership interests in two shopping centers (Note 3).

3. ACQUISITIONS

     In January and March 2011, in two separate transactions, the Company acquired its partners’ 50% ownership interests in two shopping centers for an aggregate purchase price of $40.0 million, funded through cash and the 50% proportionate assumption of two mortgage notes payable in the aggregate amount of approximately $25.1 million. The Company acquired these assets pursuant to the terms of the respective underlying joint venture agreements. After closing, the Company repaid one mortgage note payable with the principal amount of $29.2 million in total ($14.6 million assumed) and refinanced the other mortgage with a new $21.0 million, eleven-year mortgage note payable. As a result of the transactions, the Company owns 100% of the two shopping centers with an aggregate gross value of approximately $80.0 million. The Company accounted for both of these transactions as step acquisitions utilizing the purchase method of accounting. Due to the change in control that occurred, the Company recorded an aggregate gain of approximately $21.7 million associated with the acquisitions related to the difference between the Company’s carrying value and fair value of its previously held equity interest on the respective acquisition date.

     Upon acquisition of properties, the Company estimates the fair value of acquired tangible assets, consisting of land, building and improvements, and intangible assets generally consisting of: (i) above- and below-market leases; (ii) in-place leases; and (iii) tenant relationships. The Company allocates the purchase price to assets acquired and liabilities assumed on a gross basis based on their relative fair values at the date of acquisition. In estimating the fair value of the tangible and intangible assets acquired, the Company considers information obtained about each property as a result of its due diligence, marketing and leasing activities and uses various valuation methods, such as estimated cash flow projections using appropriate discount and capitalization rates, analysis of recent comparable sales transactions, estimates of replacement costs net of depreciation and other available market information. Above- and below-market lease values are recorded based on the present value of the difference between the contractual amounts to be paid and management’s estimate of the fair market lease rates for each in-place lease, which is amortized over the remaining life of the respective leases (plus fixed-rate renewal periods for below-market leases) as an adjustment to base rental revenue. The purchase price is further allocated to in-place lease values and tenant relationship values based on

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management’s evaluation of the specific characteristics of the acquired lease portfolio and the Company’s overall relationship with anchor tenants. Such amounts are amortized to depreciation and amortization expense over the weighted average remaining initial term (and expected renewal periods for tenant relationships). The fair value of the tangible assets of an acquired property considers the value of the property as if it were vacant.

     The acquisition of the two shopping centers was allocated as follows (in thousands):

Land	$	18,184
Buildings		50,683
Tenant improvements		752
Intangible assets (1)		10,753
		80,372
Less: Mortgage debt assumed		(50,127	)
Less: Below-market leases		(672	)
Net assets acquired	$	29,573

(1) Includes above-market value of leases of approximately $0.7 million.

     Intangible assets recorded in connection with the above acquisitions included the following (in thousands) (Note 4):

			Weighted
			Average
			Amortization
			Period (in Years)
In-place leases (including lease origination costs and fair market value of leases)	$	5,586		4.9
Tenant relations		5,167		9.3
Total intangible assets acquired	$	10,753

     The Company did not incur any significant transaction costs related to the acquisition of these assets as the Company managed the shopping centers in addition to having a partial ownership interest in them.

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4. OTHER ASSETS, NET

     Other assets consist of the following (in thousands):

	March 31, 2011		December 31, 2010
Intangible assets:
In-place leases (including lease origination costs and fair market value of leases), net	$	16,154	$	14,228
Tenant relations, net		12,410		9,035
Total intangible assets (A)		28,564		23,263
Other assets:
Accounts receivable, net (B)		112,982		123,259
Deferred charges, net		45,727		44,988
Prepaids		12,470		11,566
Deposits		34,568		41,160
Other assets		3,458		3,473
Total other assets, net	$	237,769	$	247,709

(A)	The Company recorded amortization expense of $1.5 million and $1.7 million for the three-month periods ended March 31, 2011 and 2010, respectively, related to these intangible assets.
(B)	Includes straight-line rent receivables, net, of $56.6 million and $56.2 million at March 31, 2011 and December 31, 2010, respectively.

     The Company capitalizes intangible assets and deferred revenue associated with below-market leases on real estate acquisitions. Intangible assets and deferred revenue are amortized as follows:

• Above- and below-market leases	Related lease terms
• In-place leases	Related lease terms
• Tenant relations	Estimated period of time that tenant will lease space in property

     Amortization of acquired above- and below-market leases is recognized as adjustments to minimum rents on the Company’s condensed consolidated statements of operations. Amortization of other intangible assets on real estate acquisitions are recognized as depreciation and amortization expense on the Company’s condensed consolidated statements of operations.

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5. REVOLVING CREDIT FACILITIES AND TERM LOAN

     The following table discloses certain information regarding the Company’s Revolving Credit Facilities and Term Loan (in millions):

			Weighted-
			Average Interest
	Carrying Value at		Rate at
	March 31, 2011		March 31, 2011			Maturity Date
Unsecured indebtedness:
Unsecured Credit Facility	$	42.7		3.6	%	February 2014
PNC Facility		—		—		February 2014
Secured indebtedness:
Term loan		550.0		1.95	%	February 2012

     Revolving Credit Facilities

     The Company maintains an unsecured revolving credit facility with a syndicate of financial institutions, arranged by JP Morgan Chase Bank, N.A. and Wells Fargo Bank, N.A. (the “Unsecured Credit Facility”). The Unsecured Credit Facility provides for borrowings of $950 million, if certain financial covenants are maintained, and an accordion feature for expansion to $1.2 billion upon the Company’s request, provided that new or existing lenders agree to the existing terms of the facility and increase their commitment level. The Unsecured Credit Facility includes a competitive bid option on periodic interest rates for up to 50% of the facility. The Unsecured Credit Facility also provides for an annual facility fee, currently at 0.50% on the entire facility.

     The Company also maintains a $65 million unsecured revolving credit facility with PNC Bank, N.A. (the “PNC Facility” and, together with the Unsecured Credit Facility, the “Revolving Credit Facilities”). The PNC Facility reflects terms consistent with those contained in the Unsecured Credit Facility.

     The Company’s borrowings under the Revolving Credit Facilities bear interest at variable rates at the Company’s election, based on either (i) the prime rate plus a specified spread (1.75% at March 31, 2011), as defined in the facility, or (ii) LIBOR, plus a specified spread (2.75% at March 31, 2011). The specified spreads vary depending on the Company’s long-term senior unsecured debt rating from Standard and Poor’s (“S&P”) and Moody’s Investors Service (“Moody’s”). The Company is required to comply with certain covenants relating to total outstanding indebtedness, secured indebtedness, maintenance of unencumbered real estate assets, unencumbered debt yield and fixed charge coverage. The Company is in compliance with these covenants at March 31, 2011. The Revolving Credit Facilities are used to temporarily finance redevelopment, development and acquisition of shopping center properties, to provide working capital and for general corporate purposes.

     Term Loan

     The Company maintains a collateralized term loan with a syndicate of financial institutions, for which KeyBank, NA serves as the administrative agent (the “Term Loan”). The Term Loan had a one-year extension option that was exercised in February 2011. Borrowings under the Term Loan

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bear interest at variable rates based on LIBOR plus a specified spread based on the Company’s long-term senior unsecured debt rating (0.875% at March 31, 2011). The collateral for this Term Loan is assets, or investment interests in certain assets, that are already collateralized by first mortgage loans. The Company is required to comply with covenants similar to those contained in the Revolving Credit Facilities. The Company was in compliance with these covenants in the Revolving Credit Facilities and the Term Loan at March 31, 2011.

6. SENIOR NOTES

     In March 2011, the Company issued $300 million aggregate principal amount of 4.75% senior unsecured notes, due in April 2018. The notes were offered to investors at a discount to par of 99.315%.

7. FINANCIAL INSTRUMENTS

     Cash Flow and Fair Value Hedges

     In March 2011, the Company entered into an interest rate swap with a notional amount of $85.0 million. This swap was executed to hedge a portion of interest rate risk associated with variable-rate borrowings. The swap converts LIBOR into a fixed rate for seven-year mortgage debt entered into in 2011.

     In March 2011, the Company terminated an interest rate swap with a notional amount of $50.0 million. The swap converted LIBOR into a fixed rate on the Company’s revolving credit facilities. The Company recorded an immaterial gain on the termination of this financial instrument.

     In February 2011, the Company entered into treasury locks with an aggregate notional amount of $200.0 million. The treasury locks were terminated in connection with the issuance of the $300 million aggregate principal amount of senior notes in March 2011, resulting in a payment of approximately $2.2 million to the counterparty. The treasury locks were executed to hedge the benchmark interest rate associated with forecasted interest payments associated with the then-anticipated issuance of fixed-rate borrowings. The effective portion of these hedging relationships has been deferred in accumulated other comprehensive income and will be reclassified into earnings over the term of the debt as an adjustment to earnings, based on the effective-yield method.

     Measurement of Fair Value

     At March 31, 2011, the Company used pay-fixed interest rate swaps to manage its exposure to changes in benchmark interest rates (the “Swaps”). The valuation of these instruments is determined using widely accepted valuation techniques including discounted cash flow analysis on the expected cash flows of each derivative. The Company determined that the significant inputs used to value its derivatives fell within Level 2 of the fair value hierarchy.

     Items Measured at Fair Value on a Recurring Basis

     The following table presents information about the Company’s financial assets and liabilities (in millions), which consist of interest rate swap agreements and marketable securities included in the

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Company’s elective deferred compensation plan that are both included in other liabilities at March 31, 2011, measured at fair value on a recurring basis as of March 31, 2011, and indicates the fair value hierarchy of the valuation techniques used by the Company to determine such fair value (in millions):

	Fair Value Measurement at
	March 31, 2011
	Level 1		Level 2		Level 3		Total
Derivative financial instruments	$	—	$	4.6	$	—	$	4.6
Marketable securities	$	4.6	$	—	$	—	$	4.6

     The unrealized gain of $0.6 million included in other comprehensive income (loss) (“OCI”) is attributable to the net change in unrealized gains or losses relating to derivative liabilities that remain outstanding at March 31, 2011, none of which were reported in the Company’s condensed consolidated statements of operations because they are documented and qualify as hedging instruments. The unrealized gain of $0.6 million is offset by the $2.2 million payment made to the counterparty related to the treasury locks that were executed and settled during the three months ended March, 31, 2011.

     Cash and Cash Equivalents, Restricted Cash, Accounts Receivable, Accounts Payable, Accrued Expenses and Other Liabilities

     The carrying amounts reported in the condensed consolidated balance sheets for these financial instruments, excluding the liability associated with the equity derivative instruments, approximated fair value because of their short-term maturities.

     Notes Receivable and Advances to Affiliates

     The fair value is estimated by discounting the current rates at which management believes similar loans would be made. The fair value of these notes, excluding those that are fully reserved, was approximately $122.9 million and $120.8 million at March 31, 2011 and December 31, 2010, respectively, as compared to the carrying amounts of $123.4 million and $122.6 million, respectively. The carrying value of the tax increment financing bonds, which was $14.0 million and $13.8 million at March 31, 2011 and December 31, 2010, respectively, approximated their fair value at March 31, 2011 and December 31, 2010. The fair value of loans to affiliates is not readily determinable and has been estimated by management based upon its assessment of the interest rate, credit risk and performance risk.

     Debt

     The fair market value of debt is determined using the trading price of public debt, or a discounted cash flow technique that incorporates a market interest yield curve with adjustments for duration, optionality and risk profile including the Company’s non-performance risk.

     Considerable judgment is necessary to develop estimated fair values of financial instruments. Accordingly, the estimates presented herein are not necessarily indicative of the amounts the Company could realize on disposition of the financial instruments.

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     Debt instruments at March 31, 2011 and December 31, 2010, with carrying values that are different than estimated fair values, are summarized as follows (in thousands):

	March 31, 2011				December 31, 2010
	Carrying				Carrying
	Amount		Fair Value		Amount		Fair Value
Senior notes	$	2,345,533	$	2,587,652	$	2,043,582	$	2,237,320
Revolving credit facilities and term loan		592,681		589,427		879,865		875,851
Mortgage payable and other indebtedness		1,331,795		1,341,256		1,378,553		1,394,393
	$	4,270,009	$	4,518,335	$	4,302,000	$	4,507,564

     Risk Management Objective of Using Derivatives

     The Company is exposed to certain risk arising from both its business operations and economic conditions. The Company principally manages its exposures to a wide variety of business and operational risks through management of its core business activities. The Company manages economic risks, including interest rate, liquidity and credit risk, primarily by managing the amount, sources and duration of its debt funding and, from time to time, the use of derivative financial instruments. Specifically, the Company enters into derivative financial instruments to manage exposures that arise from business activities that result in the receipt or payment of future known and uncertain cash amounts, the values of which are determined by interest rates. The Company’s derivative financial instruments are used to manage differences in the amount, timing and duration of the Company’s known or expected cash receipts and its known or expected cash payments principally related to the Company’s investments and borrowings.

     The Company entered into consolidated joint ventures that own real estate assets in Canada and Russia. The net assets of these subsidiaries are exposed to volatility in currency exchange rates. As such, the Company uses non-derivative financial instruments to economically hedge a portion of this exposure. The Company manages currency exposure related to the net assets of its Canadian and European subsidiaries primarily through foreign currency-denominated debt agreements.

     Cash Flow Hedges of Interest Rate Risk

     The Company’s objectives in using interest rate derivatives are to manage its exposure to interest rate movements. To accomplish this objective, the Company generally uses interest rate swaps as part of its interest rate risk management strategy. Swaps designated as cash flow hedges involve the receipt of variable-rate amounts from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount. The following table discloses certain information regarding the Swaps:

Aggregate Notional	LIBOR Fixed
Amount (in millions)	Rate			Maturity Date
$100		4.8	%	February 2012
$85		2.8	%	September 2017

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     All components of the Swaps were included in the assessment of hedge effectiveness. The Company expects that within the next 12 months it will reflect an increase to interest expense (and a corresponding decrease to earnings) of approximately $6.1 million.

     The effective portion of changes in the fair value of derivatives designated and that qualify as cash flow hedges is recorded in accumulated OCI and is subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings. During 2011, such derivatives were used to hedge the forecasted variable cash flows associated with existing obligations. The ineffective portion of the change in the fair value of derivatives is recognized directly in earnings. During the three-month periods ended March 31, 2011 and March 31, 2010, the amount of hedge ineffectiveness recorded was not material.

     The table below presents the fair value of the Company’s Swaps as well as their classification on the condensed consolidated balance sheets as of March 31, 2011 and December 31, 2010, as follows (in millions):

	Liability Derivatives
	March 31, 2011			December 31, 2010
Derivatives designated as	Balance Sheet	Fair		Balance Sheet	Fair
hedging Instruments	Location	Value		Location	Value
Interest rate products	Other liabilities	$	4.6	Other liabilities	$	5.2

     The effect of the Company’s derivative instruments on net loss is as follows (in millions):

							Amount of (Loss) Gain
	Amount of (Loss)						Reclassified from
	Gain Recognized in					Location of (Loss)	Accumulated OCI into
	OCI on Derivative					Gain Reclassified	Income (Loss)
	(Effective Portion)					from Accumulated	(Effective Portion)
	Three-Month Periods					OCI into Income	Three-Month Periods
Derivatives in Cash	Ended March 31,					(Loss) (Effective	Ended March 31,
Flow Hedging	2011			2010		Portion)	2011		2010
Interest rate products	$	(1.6	)	$	3.4	Interest expense	$	—	$	0.1

     The Company is exposed to credit risk in the event of non-performance by the counterparties to the Swaps. The Company believes it mitigates its credit risk by entering into swaps with major financial institutions. The Company continually monitors and actively manages interest costs on its variable-rate debt portfolio and may enter into additional interest rate swap positions or other derivative interest rate instruments based on market conditions. The Company has not, and does not plan to enter, into any derivative financial instruments for trading or speculative purposes.

     Credit-Risk-Related Contingent Features

     The Company has agreements with each of its Swap counterparties that contain a provision whereby if the Company defaults on certain of its unsecured indebtedness, the Company could also be declared in default on its Swaps resulting in an acceleration of payment.

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     Net Investment Hedges

     The Company is exposed to foreign exchange risk from its consolidated and unconsolidated international investments. The Company has foreign currency-denominated debt agreements, which exposes the Company to fluctuations in foreign exchange rates. The Company has designated these foreign currency borrowings as a hedge of its net investment in its Canadian and European subsidiaries. Changes in the spot rate value are recorded as adjustments to the debt balance with offsetting unrealized gains and losses recorded in OCI. Because the notional amount of the non-derivative instrument substantially matches the portion of the net investment designated as being hedged, and the non-derivative instrument is denominated in the functional currency of the hedged net investment, the hedge ineffectiveness recognized in earnings was not material.

     The effect of the Company’s net investment hedge derivative instruments on OCI is as follows (in millions):

	Amount of (Loss) Gain
	Recognized in OCI on
	Derivatives (Effective Portion)
	Three-Month Periods Ended
	March 31,
Derivatives in Net Investment Hedging Relationships	2011			2010
Euro — denominated revolving credit facilities designated as a hedge of the Company’s net investment in its subsidiary	$	(2.7	)	$	5.7
Canadian dollar — denominated revolving credit facilities designated as a hedge of the Company’s net investment in its subsidiaries	$	(2.9	)	$	(3.3	)

     See discussion of equity derivative instruments in Note 9.

8. COMMITMENTS AND CONTINGENCIES

     Accrued Expense

     The Company recorded a charge of $10.7 million as a result of the termination without cause of its Executive Chairman, the terms of which were pursuant to his amended and restated employment agreement dated July 2009. This charge included stock-based compensation expense of approximately $1.5 million relating to the acceleration of expense associated with the grant date fair value of the unvested stock-based awards partially offset by the forfeiture of previously expensed awards that will no longer be issued. At March 31, 2011, approximately $8.8 million was included in accounts payable and accrued expenses in the Company’s condensed consolidated balance sheet.

     Legal Matters

     The Company is a party to various joint ventures with the Coventry II Fund, through which 11 existing or proposed retail properties, along with a portfolio of former Service Merchandise locations, were acquired at various times from 2003 through 2006. The properties were acquired by the joint ventures as value-add investments, with major renovation and/or ground-up development

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contemplated for many of the properties. The Company is generally responsible for day-to-day management of the properties. On November 4, 2009, Coventry Real Estate Advisors L.L.C., Coventry Real Estate Fund II, L.L.C. and Coventry Fund II Parallel Fund, L.L.C. (collectively, “Coventry”) filed suit against the Company and certain of its affiliates and officers in the Supreme Court of the State of New York, County of New York. The complaint alleges that the Company: (i) breached contractual obligations under a co-investment agreement and various joint venture limited liability company agreements, project development agreements and management and leasing agreements; (ii) breached its fiduciary duties as a member of various limited liability companies; (iii) fraudulently induced the plaintiffs to enter into certain agreements; and (iv) made certain material misrepresentations. The complaint also requests that a general release made by Coventry in favor of the Company in connection with one of the joint venture properties be voided on the grounds of economic duress. The complaint seeks compensatory and consequential damages in an amount not less than $500 million, as well as punitive damages. In response, the Company filed a motion to dismiss the complaint or, in the alternative, to sever the plaintiffs’ claims. In June 2010, the court granted in part (regarding Coventry’s claim that the Company breached a fiduciary duty owed to Coventry) and denied in part (all other claims) the Company’s motion. Coventry has filed a notice of appeal regarding that portion of the motion granted by the court. The Company filed an answer to the complaint, and has asserted various counterclaims against Coventry.

     The Company believes that the allegations in the lawsuit are without merit and that it has strong defenses against this lawsuit. The Company will vigorously defend itself against the allegations contained in the complaint. This lawsuit is subject to the uncertainties inherent in the litigation process and, therefore, no assurance can be given as to its ultimate outcome and no loss provision has been recorded in the accompanying financial statements because a loss contingency is not deemed probable or estimable. However, based on the information presently available to the Company, the Company does not expect that the ultimate resolution of this lawsuit will have a material adverse effect on the Company’s financial condition, results of operations or cash flows.

     On November 18, 2009, the Company filed a complaint against Coventry in the Court of Common Pleas, Cuyahoga County, Ohio, seeking, among other things, a temporary restraining order enjoining Coventry from terminating “for cause” the management agreements between the Company and the various joint ventures because the Company believes that the requisite conduct in a “for-cause” termination (i.e., fraud or willful misconduct committed by an executive of the Company at the level of at least senior vice president) did not occur. The court heard testimony in support of the Company’s motion (and Coventry’s opposition) and on December 4, 2009, issued a ruling in the Company’s favor. Specifically, the court issued a temporary restraining order enjoining Coventry from terminating the Company as property manager “for cause.” The court found that the Company was likely to succeed on the merits, that immediate and irreparable injury, loss or damage would result to the Company in the absence of such restraint, and that the balance of equities favored injunctive relief in the Company’s favor. The Company has filed a motion for summary judgment seeking a ruling by the Court that there was no basis for Coventry’s “for cause” termination as a matter of law. The Court has not yet ruled on the Company’s motion for summary judgment. A trial on the Company’s request for a permanent injunction has not yet been scheduled. The temporary restraining order will remain in effect until the trial. Due to the inherent uncertainties of the litigation process, no assurance can be given as to the ultimate outcome of this action.

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     In addition to the litigation discussed above, the Company and its subsidiaries are subject to various legal proceedings, which, taken together, are not expected to have a material adverse effect on the Company. The Company is also subject to a variety of legal actions for personal injury or property damage arising in the ordinary course of its business, most of which are covered by insurance. While the resolution of all matters cannot be predicted with certainty, management believes that the final outcome of such legal proceedings and claims will not have a material adverse effect on the Company’s liquidity, financial position or results of operations.

9. EQUITY

     The following table summarizes the changes in equity since December 31, 2010 (in millions):

	Developers Diversified Realty Corporation Equity
								Accumulated
								Distributions						Accumulated
								in Excess of			Deferred			Other			Treasury			Non-
	Preferred		Common		Paid-in			Net Income			Compensation			Comprehensive			Stock at			Controlling
	Shares		Shares		Capital			(Loss)			Obligation			Income (Loss)			Cost			Interests			Total
Balance, December 31, 2010	$	555.0	$	25.6	$	3,869.0		$	(1,378.3	)	$	14.3		$	25.6		$	(14.6	)	$	38.1		$	3,134.7
Issuance of common shares related to dividend reinvestment plan and director compensation		—		—		0.3			—			—			—			—			—			0.3
Issuance of common shares related to exercise of warrants		—		1.0		133.2			—			—			—			—			—			134.2
Contributions from non-controlling interests		—		—		—			—			—			—			—			0.1			0.1
Issuance of restricted stock		—		0.1		(2.3	)		—			0.2			—			2.2			—			0.2
Vesting of restricted stock		—		—		1.7			—			(1.9	)		—			0.1			—			(0.1	)
Stock-based compensation expense		—		—		2.1			—			—			—			—			—			2.1
Dividends declared-common shares		—		—		—			(10.7	)		—			—			—			—			(10.7	)
Dividends declared-preferred shares		—		—		—			(11.3	)		—			—			—			—			(11.3	)
Distributions to non-controlling interests		—		—		—			—			—			—			—			(0.4	)		(0.4	)
Comprehensive income:
Net income		—		—		—			35.3			—			—			—			0.1			35.4
Other comprehensive (loss) income:
Settlement/change in fair value of interest rate contracts		—		—		—			—			—			(1.8	)		—			—			(1.8	)
Foreign currency translation		—		—		—			—			—			3.9			—			1.1			5.0
Comprehensive income		—		—		—			35.3			—			2.1			—			1.2			38.6
Balance, March 31, 2011	$	555.0	$	26.7	$	4,004.0		$	(1,365.0	)	$	12.6		$	27.7		$	(12.3	)	$	39.0		$	3,287.7

     Common Shares and Redemption of Preferred Shares

     Mr. Alexander Otto and certain members of his family (the “Otto Family”) exercised their warrants for 10 million common shares for cash proceeds of $60 million in March 2011. In addition, in March 2011, the Company entered into a forward sale agreement to sell an aggregate of 9.5 million of its common shares for net proceeds aggregating $130.2 million, or $13.71 per share, which settled in April 2011 (Note 15).

     In April 2011, the net proceeds from the issuance of these common shares were used to redeem all outstanding shares, aggregating $180 million, of the Company’s 8.0% Class G cumulative redeemable preferred shares at a redemption price of $25.105556 per Class G depositary share (the sum of $25.00 per share and dividends per share of $0.105556 prorated to the redemption date).

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The Company expects to record a non-cash charge of approximately $6.4 million to net income available to common shareholders in the second quarter of 2011 relating to the write-off of the Class G preferred shares’ original issuance costs (Note 15).

     Dividends

     Common share dividends declared were $0.04 and $0.02 per share, respectively, for the three-month periods ended March 31, 2011 and 2010, which were paid in cash.

     Deferred Obligations

     Certain officers elected to have their deferred compensation distributed in 2011, which resulted in a reduction of the deferred obligation and corresponding increase to paid-in capital of approximately $1.9 million.

     Equity Derivative Instruments — Otto Transaction

     In February 2009, the Company entered into a stock purchase agreement with the Otto Family that provided for the issuance of warrants to purchase up to 10.0 million common shares with an exercise price of $6.00 per share to members of the Otto Family. In March 2011, the Otto Family notified the Company regarding its intent to exercise the warrants (the “Notification Date”). As discussed above, all of the warrants were exercised in March 2011 for cash at $6.00 per common share. The exercise price of the warrants was subject to downward adjustment if the weighted average purchase price of all additional common shares sold, as defined, from the date of issuance of the applicable warrant was less than $6.00 per share (herein referred to as “Downward Price Protection Provisions”).

     The Downward Price Protection Provisions described above resulted in the warrants being required to be recorded at fair value as of the shareholder approval date of the Stock Purchase Agreement of April 9, 2009, and marked-to-market through earnings as of each balance sheet date thereafter until the exercise date of March 18, 2011. These equity instruments were issued as part of the Company’s overall deleveraging strategy and were not issued in connection with any speculative trading activity or to mitigate any market risks.

     The fair value of the Company’s equity derivative instruments (warrants) were classified on the Company’s balance sheet as equity derivative liability-affiliate and had a fair value of $74.3 million at March 18, 2011, the exercise date, which was reclassified to paid-in capital.

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     The effect of the Company’s equity derivative instruments on net income (loss) is as follows (in millions):

		Three-Month Periods Ended
Derivatives not		March 31,
Designated	Income Statement	2011		2010
as Hedging Instruments	Location	Gain (Loss)
	Gain (loss) on
	equity derivative
Warrants	instruments	$	21.9	$	(24.9	)

     Measurement of Fair Value — Equity Derivative Instruments Valued on a Recurring Basis

     The valuation of these instruments is determined using an option pricing model that considers all relevant assumptions including the Downward Price Protection Provisions. The two key unobservable input assumptions included in the valuation of the warrants were the volatility and dividend yield. Both measures are susceptible to change over time given the impact of movements in the Company’s common share price on each. The dividend yield assumptions used ranged from 3.0% - 3.2% in the first quarter of 2011 and 3.1% — 3.2% in the first quarter of 2010. Since the initial valuation date, the Company used historical volatility assumptions to determine the estimate of fair value of the five-year warrants. The Company believed that the long-term historic volatility better represented the long-term future volatility and was more consistent with how an investor would view the value of these securities. The Company continually reassessed these assumptions and reviewed the assumptions again in March 2011 upon notification from the Otto Family regarding their intent to exercise the warrants. The Company determined that an implied volatility assumption was more representative of how a market participant would value the instruments given the now shorter term nature of the warrants. The volatility assumptions used were approximately 37% in the first quarter of 2011 and approximately 78% in the first quarter of 2010. The Company determined that the warrants fell within Level 3 of the fair value hierarchy due to the volatility and dividend yield assumptions used in the overall valuation.

     The table below presents a reconciliation of the beginning and ending balances of the equity derivative instruments that were included in other liabilities at December 31, 2010 and having fair value measurements based on significant unobservable inputs (Level 3) (in millions):

	Equity
	Derivative
	Instruments —
	Liability
Balance of Level 3 at December 31, 2010	$	96.2
Unrealized gain		(21.9	)
Transfer out of liability to paid-in capital		(74.3	)
Balance of Level 3 at March 31, 2011	$	—

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10. FEE AND OTHER INCOME

          Fee and other income from continuing operations were comprised of the following (in millions):

	Three-Month Periods
	Ended March 31,
	2011		2010
Management, development and other fee income	$	11.7	$	14.0
Ancillary and other property income		7.2		4.7
Lease termination fees		0.6		0.6
Financing fees		0.4		0.2
Other miscellaneous		0.1		0.5
	$	20.0	$	20.0

11. IMPAIRMENT CHARGES

          The Company recorded impairment charges during the three-month periods ended March 31, 2011 and 2010, on the following consolidated assets because the carrying value of the assets was in excess of the estimated fair market value (in millions):

	Three-Month Periods
	Ended March 31,
	2011		2010
Undeveloped land	$	3.8	$	—
Assets marketed for sale		—		0.8
Total continuing operations (A)	$	3.8	$	0.8
Sold assets or assets held for sale		2.0		2.3
Total impairment charges	$	5.8	$	3.1

(A) The impairment charges were triggered primarily due to the Company’s marketing of these assets for sale. The operating asset was not classified as held for sale as of March 31, 2010, due to outstanding substantive contingencies associated with the contract.

          Items Measured at Fair Value on a Non-Recurring Basis

          The following table presents information about the Company’s impairment charges that were measured on a fair value basis for the three months ended March 31, 2011. The table indicates the fair value hierarchy of the valuation techniques used by the Company to determine such fair value (in millions):

	Fair Value Measurement at March 31, 2011
	Level 1		Level 2		Level 3		Total		Total Losses
Long-lived assets — held and used and held for sale	$	—	$	—	$	26.1	$	26.1	$	5.8

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12. DISCONTINUED OPERATIONS

          All revenues and expenses of discontinued operations sold have been reclassified in the condensed consolidated statements of operations for the three-month periods ended March 31, 2011 and 2010. The Company has one asset considered held for sale at March 31, 2011. The Company considers assets held for sale when the transaction has been approved by the appropriate levels of management and there are no known significant contingencies relating to the sale such that the sale of the property within one year is considered probable. Included in discontinued operations for the three-month periods ended March 31, 2011 and 2010, are two properties sold in 2011 and one property held for sale at March 31, 2011 aggregating 0.2 million square feet, and 31 properties sold in 2010, (including two held for sale at December 31, 2009) aggregating 2.9 million square feet, respectively. In addition, included in discontinued operations are 25 other properties that were deconsolidated for accounting purposes in 2010, aggregating 1.9 million square feet, which represents the activity associated with a joint venture that owns the underlying real estate of certain assets formerly occupied by Mervyns. These assets were classified as discontinued operations for the three months ended March 31, 2010 as the Company has no significant continuing involvement. The balance sheet relating to the asset held for sale and the operating results relating to assets sold, designated as held for sale or deconsolidated as of March 31, 2011, are as follows (in thousands):

	March 31, 2011
Land	$	1,724
Building		6,544
		8,268
Less: Accumulated depreciation		(1,841	)
Total assets held for sale	$	6,427

	Three-Month Periods Ended
	March 31,
	2011			2010
Revenues	$	327		$	5,227
Operating expenses		83			3,671
Impairment charges		1,983			2,255
Interest, net		92			3,906
Depreciation and amortization		98			1,994
		2,256			11,826
Loss from discontinued operations		(1,929	)		(6,599	)
Gain on disposition of real estate		244			566
Net loss	$	(1,685	)	$	(6,033	)

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13. EARNINGS PER SHARE

          The Company’s unvested restricted share units contain rights to receive nonforfeitable dividends, and thus are participating securities requiring the two-class method of computing earnings per share (“EPS”). Under the two-class method, EPS is computed by dividing the sum of distributed earnings to common shareholders and undistributed earnings allocated to common shareholders by the weighted average number of common shares outstanding for the period. In applying the two-class method, undistributed earnings are allocated to both common shares and participating securities based on the weighted average shares outstanding during the period. The following table provides a reconciliation of net income (loss) from continuing operations and the number of common shares used in the computations of “basic” EPS, which uses the weighted average number of common shares outstanding without regard to dilutive potential common shares, and “diluted” EPS, which includes all such shares (in thousands, except per share amounts):

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	Three-Month Periods
	Ended March 31,
	2011			2010
Basic Earnings:
Continuing Operations:
Income (loss) from continuing operations	$	37,925		$	(19,877	)
Plus: Loss on disposition of real estate		(861	)		(675	)
Plus: Income attributable to non-controlling interests		(67	)		(101	)
Income (loss) from continuing operations attributable to DDR		36,997			(20,653	)
Less: Preferred dividends		(10,567	)		(10,567	)
Basic— Income (loss) from continuing operations attributable to DDR common shareholders		26,430			(31,220	)
Less: Earnings attributable to unvested shares and operating partnership units		(224	)		(31	)
Basic— Income (loss) from continuing operations	$	26,206		$	(31,251	)
Discontinued Operations:
Loss from discontinued operations		(1,685	)		(6,033	)
Plus: Loss attributable to non-controlling interests		—			2,439
Basic— Loss from discontinued operations		(1,685	)		(3,594	)
Basic— Net income (loss) attributable to DDR common shareholders after allocation to participating securities	$	24,521		$	(34,845	)
Diluted Earnings:
Continuing Operations:
Basic—Net income (loss) attributable to DDR common shareholders after allocation to participating securities	$	26,206		$	(31,251	)
Less: Fair value adjustment for Otto Family warrants		(21,926	)		—
Diluted— Income (loss) from continuing operations		4,280			(31,251	)
Discontinued Operations:
Basic— Loss from discontinued operations		(1,685	)		(3,594	)
Diluted— Net income (loss) attributable to DDR common shareholders after allocation to participating securities	$	2,595		$	(34,845	)
Number of Shares:
Basic— Average shares outstanding		255,966			227,133
Effect of dilutive securities:
Warrants		4,840			—
Stock options		558			—
Value sharing equity program		1,198			—
Forward equity agreement		19			—
Diluted — Average shares outstanding		262,581			227,133
Basic Earnings Per Share:
Income (loss) from continuing operations attributable to DDR common shareholders	$	0.10		$	(0.14	)
Loss from discontinued operations attributable to DDR common shareholders		—			(0.01	)
Net income (loss) attributable to DDR common shareholders	$	0.10		$	(0.15	)
Dilutive Earnings Per Share:
Income (loss) from continuing operations attributable to DDR common shareholders	$	0.02		$	(0.14	)
Loss from discontinued operations attributable to DDR common shareholders		(0.01	)		(0.01	)
Net income (loss) attributable to DDR common shareholders	$	0.01		$	(0.15	)

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          The following potentially dilutive securities are considered in the calculation of EPS as described below:

          Dilutive Securities

• Options to purchase 3.4 million common shares were outstanding at both March 31, 2011 and 2010. A portion of these options are considered in the computation of diluted EPS using the treasury stock method for the three-month period ended March 31, 2011. Options aggregating 2.2 million and 3.4 million were anti-dilutive in the calculations at March 31, 2011 and 2010, respectively. Accordingly, the anti-dilutive options were excluded from the computations.

• The forward equity agreement entered into in March 2011 for 9.5 million common shares was included in the computation of diluted EPS utilizing the treasury stock method for the three-month period ended March 31, 2011. This agreement was not outstanding in 2010.

• Shares subject to issuance under the Company’s value sharing equity program (“VSEP”) are considered in the computation of diluted EPS for the three-month period ended March 31, 2011. The shares subject to issuance under the VSEP are not considered in the computation of diluted EPS for the three-month period ended March 31, 2010, as the shares were considered anti-dilutive due to the Company’s loss from continuing operations.

• Warrants to purchase 10.0 million common shares issued in 2009 are considered in the computation of diluted EPS for the period outstanding (January 1, 2011 to March 18, 2011). The warrants were not considered for the three-month period ended March 31, 2010, as the warrants were considered anti-dilutive due to the Company’s loss from continuing operations.

Anti-dilutive Securities:

• The Company’s three series of senior convertible notes, which are convertible into common shares of the Company with conversion prices of approximately $74.56, $64.23 and $16.38, respectively, at March 31, 2011, were not included in the computation of diluted EPS for the three-month periods ended March 31, 2011 and 2010 because the Company’s common share price did not exceed the conversion prices of the conversion features in these periods and would therefore be anti-dilutive. The senior convertible notes with a conversion price of $16.38 were not outstanding at March 31, 2010. In addition, the purchased option related to two of the senior convertible notes issuances is not included in the computation of diluted EPS as the purchase option is anti-dilutive.

14. SEGMENT INFORMATION

          The Company has three reportable operating segments, shopping centers, Brazil equity investment and other investments. Each consolidated shopping center is considered a separate operating segment; however, each shopping center on a stand-alone basis represents less than 10% of the revenues, profit or loss, and assets of the combined reported operating segment and meets the majority of the aggregation criteria under the applicable standard. The following table summarizes the Company’s shopping and office properties, including those located in Brazil:

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	March 31,
	2011		2010
Shopping centers owned		476		552
Unconsolidated joint ventures		191		213
Consolidated joint ventures		3		33
States (A)		41		44
Office properties		5		6
States		3		4

(A) Excludes shopping centers owned in Puerto Rico and Brazil.

          The tables below present information about the Company’s reportable segments (in thousands).

	Three-Month Period Ended March 31, 2011
							Brazil Equity
	Other Investments			Shopping Centers			Investment		Other			Total
Total revenues	$	1,422		$	201,562							$	202,984
Operating expenses		(480	)		(68,321	) (A)							(68,801	)
Net operating income		942			133,241								134,183
Unallocated expenses (B)									$	(98,197	)		(98,197	)
Equity in net income of joint ventures and impairment of joint ventures					(3,013	)	$	4,952					1,939
Income from continuing operations												$	37,925
Total gross real estate assets	$	47,762		$	8,448,981							$	8,496,743

	Three-Month Period Ended March 31, 2010
							Brazil Equity
	Other Investments			Shopping Centers			Investment		Other			Total
Total revenues	$	1,419		$	200,712							$	202,131
Operating expenses		(748	)		(61,854	) (A)							(62,602	)
Net operating income		671			138,858								139,529
Unallocated expenses (B)									$	(161,053	)		(161,053	)
Equity in net income of joint ventures					105		$	1,542					1,647
Loss from continuing operations												$	(19,877	)
Total gross real estate assets	$	49,727		$	8,736,082							$	8,785,809

(A)	Includes impairment charges of $3.8 million and $0.8 million for the three-month periods ended March 31, 2011 and 2010, respectively.
(B)	Unallocated expenses consist of general and administrative, depreciation and amortization, other income/expense and tax benefit/expense as listed in the condensed consolidated statements of operations.

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15. SUBSEQUENT EVENTS

          The Company’s forward sale agreement to sell an aggregate of 9.5 million of its common shares for net proceeds aggregating $130.2 million, or $13.71 per share, was settled in April 2011 (Note 9).

          In April 2011, the Company redeemed all outstanding shares of its 8.0% Class G preferred shares, aggregating $180 million, at a redemption price of $25.105556 per Class G depositary share (the sum of $25.00 per share and dividends per share of $0.105556 prorated to the redemption date). The Company expects to record a non-cash charge of approximately $6.4 million to net income available to common shareholders in the second quarter of 2011 relating to the write-off of the Class G preferred shares’ original issuance costs.

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Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

          Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) provides readers with a perspective from management on the Company’s financial condition, results of operations, liquidity and other factors that may affect the Company’s future results. The Company believes it is important to read the MD&A in conjunction with its Annual Report on Form 10-K for the year ended December 31, 2010 as well as other publicly available information.

Executive Summary

          The Company is a self-administered and self-managed real estate investment trust (“REIT”) in the business of owning, managing and developing a portfolio of shopping centers. As of March 31, 2011, the Company’s portfolio consisted of 476 shopping centers and five office properties (including 191 shopping centers owned through unconsolidated joint ventures and three shopping centers that are otherwise consolidated by the Company). These properties consist of shopping centers, lifestyle centers and enclosed malls owned in the United States, Puerto Rico and Brazil. At March 31, 2011, the Company owned and/or managed approximately 124.3 million total square feet of gross leasable area (“GLA”), which includes all of the aforementioned properties and 41 properties owned by a third party. The Company also owns land in Canada and Russia at which active development was deferred. At March 31, 2011, the aggregate occupancy of the Company’s shopping center portfolio was 88.1%, as compared to 86.4% at March 31, 2010. The Company owned 552 shopping centers and six office properties at March 31, 2010. The average annualized base rent per occupied square foot was $13.16 at March 31, 2011, as compared to $12.79 at March 31, 2010.

          Net income applicable to DDR common shareholders for the three-month period ended March 31, 2011, was $24.7 million, or $0.01 per share diluted and $0.10 per share basic, compared to net loss applicable to DDR common shareholders of $34.8 million, or $0.15 per share (diluted and basic), for the prior-year comparable period. Funds from operations (“FFO”) applicable to DDR common shareholders for the three-month period ended March 31, 2011, was $89.1 million compared to $28.4 million for the three-month period ended March 31, 2010. The increase in net income applicable to DDR common shareholders and FFO applicable to DDR common shareholders for the three-month period ended March 31, 2011, was primarily the result of the gain on change in control of interests relating to the Company’s acquisition of two assets from unconsolidated joint ventures and the effect of the valuation adjustments associated with the warrants that were exercised in full for cash in the first quarter of 2011, partially offset by an executive separation charge.

First Quarter 2011 Operating Results

          The Company maintained strong operating performance in the first quarter of 2011 as evidenced by the number of leases executed during the quarter and continued upward trending in average rental rates. The Company executed 428 total leases for over 2.6 million square feet during the first quarter. First-year rents on new deals provide a solid indicator of leasing trends. The average first-year rent for all new deals executed in the first quarter of 2011 was $14.17 per square foot, an increase from $12.80 per square foot in the first quarter of 2010. This growth was achieved without

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increasing the Company’s historically low tenant capital expenditures. The weighted average cost of tenant improvements and lease commissions estimated to be incurred for leases executed during the quarter was only $2.44 per square foot.

          The Company continued to execute on its long-term plan to reduce leverage, extend debt maturities and overall improve the Company’s liquidity. The achievements in the first quarter of 2011 included the following:

• issued $300 million aggregate principal amount of 4.75% senior unsecured notes due April 2018;

• unconsolidated joint venture in Brazil completed an initial public offering raising approximately US$280 million of gross proceeds; and

• raised $190.2 million of equity proceeds in connection with the exercise of warrants for 10 million common shares in March 2011 and through the issuance of 9.5 million common shares in April 2011, which were used to redeem $180 million of 8.0% Class G preferred shares in April 2011.

          The Company continues to carefully consider opportunities that fit its selective acquisition requirements and remains prudent in its underwriting and bidding practices. As part of the Company’s strategy to recycle capital from non-prime asset sales into the acquisitions of prime assets (market-dominant shopping centers with high-quality tenants located in attractive markets with strong demographic profiles) to improve portfolio quality, in the first quarter of 2011, the Company had transactional activity consisting of $43 million in asset sales (of which the Company’s share was approximately $20 million) and $40 million of acquisitions of two prime properties from unconsolidated joint ventures. The Company believes these transactional activities are indicative of its focus in upgrading the quality of the portfolio.

          At March 31, 2011, the Company continues to operate with less financial risk than in recent years. This strategy has allowed the Company to begin to review select investment opportunities and redeploy net proceeds from dispositions to acquisitions in future periods.

Results of Operations

Continuing Operations

          Shopping center properties owned as of January 1, 2010, but excluding properties under development or redevelopment and those classified in discontinued operations, are referred to herein as the “Core Portfolio Properties.”

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Revenues from Operations (in thousands)

	Three-Month Periods
	Ended March 31,
	2011		2010		$ Change		% Change
Base and percentage rental revenues (A)	$	136,329	$	135,787	$	542		0.4	%
Recoveries from tenants (B)		46,614		46,370		244		0.5
Fee and other income (C)		20,041		19,974		67		0.3
Total revenues	$	202,984	$	202,131	$	853		0.4	%

(A) The increase is due to the following (in millions):

	Increase
	(Decrease)
Core Portfolio Properties	$	0.9
Acquisition of real estate assets		0.6
Development/redevelopment of shopping center properties		(0.3	)
Straight-line rents		(0.7	)
	$	0.5

The following tables present the operating statistics impacting base and percentage rental revenues summarized by the following portfolios: combined shopping center portfolio, office property portfolio, wholly-owned shopping center portfolio and joint venture shopping center portfolio:

	Shopping Center						Office Property
	Portfolio (1)						Portfolio
	March 31,						March 31,
	2011			2010			2011			2010
Centers owned		476			552			5			6
Aggregate occupancy rate		88.1	%		86.4	%		82.4	%		71.9	%
Average annualized base rent per occupied square foot	$	13.16		$	12.79		$	11.10		$	12.27

	Wholly-Owned Shopping						Joint Venture Shopping
	Centers						Centers(1)
	March 31,						March 31,
	2011			2010			2011			2010
Centers owned		282			306			191			213
Consolidated centers primarily owned through a joint venture previously occupied by Mervyns		n/a			n/a			3			33
Aggregate occupancy rate		87.9	%		87.2	%		88.5	%		83.6	%
Average annualized base rent per occupied square foot	$	12.10		$	11.88		$	14.54		$	13.85

⁽¹⁾ Excludes shopping centers owned by unconsolidated joint ventures in which the Company has written its investment basis down to zero and is receiving no allocation of income.

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(B)

The increase in recoveries is primarily a function of the increase in recoverable operating and maintenance expenses. Recoveries were approximately 71.8% and 72.9% of operating expenses and real estate taxes including the impact of bad debt expense recognized for the three months ended March 31, 2011 and 2010, respectively. The decrease in the recoveries percentage in 2011 is primarily due to an increase in operating expenses that are not recoverable as further discussed below.

(C)

Composed of the following (in millions):

	Three-Month Periods
	Ended March 31,
	2011		2010		(Decrease) Increase
Management fees	$	11.3	$	13.6	$	(2.3	)
Development fees		0.4		0.4		—
Ancillary income		4.9		4.3		0.6
Other property related income		2.3		0.4		1.9
Lease termination fees		0.6		0.6		—
Financing fees		0.4		0.2		0.2
Other		0.1		0.5		(0.4	)
	$	20.0	$	20.0	$	—

The decrease in management fee income in 2011 is largely a result of 38 asset sales by the Company’s unconsolidated joint ventures from January 1, 2010 through March 31, 2011.

Expenses from Operations (in thousands)

	Three-Month Periods
	Ended March 31,
	2011		2010		$ Change			% Change
Operating and maintenance (A)	$	38,104	$	34,385	$	3,719			10.8	%
Real estate taxes (A)		26,841		27,400		(559	)		(2.0	)
Impairment charges (B)		3,856		817		3,039			372.0
General and administrative (C)		29,378		23,275		6,103			26.2
Depreciation and amortization (A)		56,042		55,177		865			1.6
	$	154,221	$	141,054	$	13,167			9.3	%

(A) The changes for the three months ended March 31, 2011 compared to 2010, are due to the following (in millions):

	Operating and
	Maintenance			Real Estate Taxes			Depreciation
Core Portfolio Properties	$	2.6		$	(0.4	)	$	0.2
Acquisitions of real estate assets		0.1			0.1			0.3
Development/redevelopment of shopping center properties		1.8			(0.3	)		0.2
Office properties		(0.2	)		—			—
Provision for bad debt expense		(0.6	)		—			—
Personal property		—			—			0.2
	$	3.7		$	(0.6	)	$	0.9

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	The increase in operating and maintenance expenses in 2011 is primarily due to higher insurance costs and various other property level expenditures.
(B)	The Company recorded impairment charges during the three-month periods ended March 31, 2011 and 2010, on the following consolidated assets (in millions):

	Three-Month Periods
	Ended March 31,
	2011		2010
Undeveloped land	$	3.8	$	—
Assets marketed for sale		—		0.8
Total continuing operations	$	3.8	$	0.8
Sold assets or assets held for sale		2.0		2.3
Total impairment charges	$	5.8	$	3.1

	The impairment charges from continuing operations were triggered primarily due to the Company’s marketing of these assets for sale. The operating asset was not classified as held for sale as of March 31, 2010, due to outstanding substantive contingencies associated with the contract.
(C)	General and administrative expenses were approximately 7.1% and 5.5% of total revenues, including total revenues of unconsolidated joint ventures and managed properties and discontinued operations, for the three-month periods ended March 31, 2011 and 2010, respectively. The Company continues to expense internal leasing salaries, legal salaries and related expenses associated with certain leasing and re-leasing of existing space.
	In the first quarter of 2011, the Company recorded a charge of $10.7 million as a result of the termination without cause of its Executive Chairman, the terms of which were pursuant to his amended and restated employment agreement. During the three months ended March 31, 2010, the Company incurred a $2.1 million separation charge relating to the departure of another executive officer.

Other Income and Expenses (in thousands)

	Three-Month Periods
	Ended March 31,
	2011			2010			$ Change			% Change
Interest income (A)	$	2,796		$	1,333		$	1,463			109.8	%
Interest expense (B)		(60,243	)		(56,096	)		(4,147	)		7.4
Gain on retirement of debt, net (C)		—			1,091			(1,091	)		(100.0	)
Gain (loss) on equity derivative instruments (D)		21,926			(24,868	)		46,794			(188.2	)
Other income (expense), net (E)		1,341			(3,059	)		4,400			(143.8	)
	$	(34,180	)	$	(81,599	)	$	47,419			(58.1	)%

(A) Increased primarily relating to $58.3 million in loan receivables originated and purchased in September 2010.

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(B) The weighted-average debt outstanding and related weighted-average interest rates including amounts allocated to discontinued operations are as follows:

	Three-Month Periods Ended
	March 31,
	2011			2010
Weighted-average debt outstanding (in billions)	$	4.3		$	4.9
Weighted-average interest rate		5.6	%		4.9	%

	The weighted average interest rate at March 31, 2011 and 2010 was 5.5% and 5.2%, respectively.
	The increase in 2011 interest expense is primarily due to the repayment of shorter-term, lower interest rate debt with the proceeds from long term, higher cost debt, partially offset by a reduction in outstanding debt. The Company ceases the capitalization of interest as assets are placed in service or upon the suspension of construction. Interest costs capitalized in conjunction with development and expansion projects and unconsolidated development joint venture interests were $3.0 million and $3.1 million for the three-month periods ended March 31, 2011 and 2010, respectively.
	In the first quarter of 2011, based on changes in the Company’s debt credit ratings, the interest rate on the Company’s term loan was reduced from LIBOR plus 120 bps to LIBOR plus 88 bps.
(C)	Primarily relates to the Company’s purchase of approximately $155.9 million aggregate principal amount of its outstanding senior unsecured notes, including senior convertible notes, at a net discount to par during the three months ended March 31, 2010. Approximately $83.1 million aggregate principal amount of senior unsecured notes repurchased in March 2010 occurred through cash tender offers.
(D)	Represents the impact of the valuation adjustments for the equity derivative instruments issued as part of the stock purchase agreement with Mr. Alexander Otto (the “Investor”) and certain members of the Otto family (collectively with the Investor, the “Otto Family”). The valuation and resulting charges/gains primarily relate to the difference between the closing trading value of the Company’s common shares from the beginning of the period through the end of the respective period presented except that in 2011, the final valuation was done as of March 18, 2011, the exercise date of the warrants. Because all of the warrants were exercised in March 2011, the Company will no longer record the changes in fair value of these instruments in its future earnings. The liability at the date of exercise was reclassified into paid-in capital upon the receipt of cash from the Otto Family and the issuance of the Company’s common shares.
(E)	Other income (expenses) were comprised of the following (in millions):

	Three-Month Period
	Ended March 31,
	2011			2010
Litigation-related expenses	$	(1.0	)	$	(1.7	)
Debt extinguishment costs		(0.2	)		(1.1	)
Settlement of lease liability obligation		2.6			—
Abandoned projects and other expenses		(0.1	)		(0.3	)
	$	1.3		$	(3.1	)

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In the fourth quarter of 2010, the Company established a lease liability reserve in the amount of $3.3 million for three operating leases as a result of an abandoned development project and two office closures. The Company reversed $2.6 million of this previously recorded charge due to the termination of the ground lease related to the abandoned development project in the first quarter of 2011.

Other Items (in thousands)

	Three-Month Periods
	Ended March 31,
	2011			2010			$ Change			% Change
Equity in net income of joint ventures (A)	$	1,974		$	1,647		$	327			19.9	%
Impairment of joint venture investments		(35	)		—			(35	)		—
Gain on change in control of interests (B)		21,729			—			21,729			—
Tax expense of taxable REIT subsidiaries and state franchise and income taxes		(326	)		(1,002	)		676			(67.5	)%

(A)

The increase in equity in net income of joint ventures for the three months ended March 31, 2011 compared to the prior-year period is primarily a result of the income from the Company’s investment in Sonae Sierra Brasil discussed below, partially offset by the Company’s proportionate share of loss on sale and the elimination of equity income from the sale of unconsolidated joint venture assets.

At March 31, 2011 and 2010, the Company had an approximate 33% and 48% interest, respectively, in an unconsolidated joint venture, Sonae Sierra Brasil, which owns real estate in Brazil and is managed in San Paulo, Brazil. In February 2011, Sonae Sierra Brasil, completed an initial public offering (“IPO”) of its common shares on the Sao Paulo Stock Exchange, raising total proceeds of approximately US$280 million. The Company’s effective ownership interest in Sonae Sierra Brasil decreased during the first quarter of 2011 due to the IPO. This entity uses the functional currency of Brazilian Reais. The Company has generally chosen not to mitigate any of the residual foreign currency risk through the use of hedging instruments for this entity. The operating cash flow generated by this investment has been retained by the joint venture and reinvested in ground up developments and expansions in Brazil. The effects of foreign currency translation in the Company’s financial statements relating to this investment are as follows (in millions):

	Three-Month Periods
	Ended March 31,
	2011			2010
Net income of Sonae Sierra Brasil	R$	11.9		R$	6.4
Weighted-average exchange rate		1.68			1.81
	$	7.1		$	3.5
Disproportionate partner income		(1.5	)		(1.4	)
Equity in net income of joint venture		5.6			2.1
Amortization of basis differential		(0.6	)		(0.6	)
DDR share of equity in net income	$	5.0		$	1.5

The increase in equity in net income from the Sonae Sierra Brasil joint venture primarily is due to shopping center expansion activity coming on line, increases in parking revenue and increases in interest income.

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(B) In the first quarter of 2011, the Company acquired its partners’ 50% interest in two shopping centers. The Company accounted for both of these transactions as step acquisitions. Due to the change in control that occurred, the Company recorded an aggregate gain associated with the acquisitions related to the difference between the Company’s carrying value and fair value of the previously held equity interests.

Discontinued Operations (in thousands)

	Three-Month Periods
	Ended March 31,
	2011			2010			$ Change			% Change
Loss from discontinued operations (A)	$	(1,929	)	$	(6,599	)	$	4,670			(70.8	)%
Gain on disposition of real estate, net of tax		244			566			(322	)		(56.9	)
	$	(1,685	)	$	(6,033	)	$	4,348			(72.1	)%

(A) The Company sold two properties during the three-month period ended March 31, 2011 and had one property held for sale at March 31, 2011, aggregating 0.2 million square feet. In addition, the Company sold 31 properties in 2010 (including two properties held for sale at December 31, 2009) aggregating 2.9 million square feet. Also, included in discontinued operations are 25 other properties that were deconsolidated for accounting purposes in 2010, aggregating 1.9 million square feet, which represents the activity associated with a joint venture that owns the underlying real estate of certain assets formerly occupied by Mervyns. These assets were classified as discontinued operations for the three-month period ended March 31, 2010 as the Company has no significant continuing involvement. In addition, included in the reported loss for the three-month periods ended March 31, 2011 and 2010, is $2.0 million and $2.3 million, respectively, of impairment charges related to these assets.

Loss on Disposition of Real Estate (in thousands)

	Three-Month Periods
	Ended March 31,
	2011			2010			$ Change			% Change
Loss on disposition of real estate, net (A)	$	(861	)	$	(675	)	$	(186	)		27.6	%

(A) Amounts primarily attributable to the sale of land. The sales of land did not meet the criteria for discontinued operations because the land did not have any significant operations prior to disposition.

Non-Controlling Interests (in thousands)

	For the Three Months
	Ended March 31,
	2011			2010		$ Change			% Change
Non-controlling interests (A)	$	(67	)	$	2,338	$	(2,405	)		(102.9	)%

(A) The change is a result of the net loss attributable to a consolidated joint venture, which held assets previously occupied by Mervyns, that was deconsolidated in 2010.

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Net Income (Loss) (in thousands)

	Three-Month Periods
	Ended March 31,
	2011		2010			$ Change		% Change
Net income (loss) attributable to DDR	$	35,312	$	(24,247	)	$	59,559		(245.6	)%

     The increase in net income attributable to DDR for the three months ended March 31, 2011 compared to 2010, was primarily the result of the gain on change in control of interests relating to the Company’s acquisition of two assets from unconsolidated joint ventures and the effect of the valuation adjustments associated with the warrants that were exercised in full for cash in the first quarter of 2011, partially offset by an executive separation charge. A summary of changes in 2011 as compared to 2010 is as follows (in millions):

Decrease in net operating revenues (total revenues in excess of operating and maintenance expenses and real estate taxes)	$	(2.3	)
Increase in consolidated impairment charges		(3.0	)
Increase in general and administrative expenses (A)		(6.1	)
Increase in depreciation expense		(0.9	)
Increase in interest income		1.5
Increase in interest expense		(4.1	)
Decrease in gain on retirement of debt, net		(1.1	)
Change in equity derivative instrument valuation adjustments		46.8
Change in other expense		4.4
Increase in equity in net income of joint ventures		0.3
Increase in gain on change in control of interests		21.7
Decrease in income tax expense		0.7
Decrease in loss from discontinued operations		4.3
Decrease in loss on disposition of real estate		(0.2	)
Change in non-controlling interests		(2.4	)
Increase in net income attributable to DDR	$	59.6

(A) Included in general and administrative expenses are executive separation charges of $10.7 million and $2.1 million, for the three month periods ended March 31, 2011 and 2010, respectively.

Funds From Operations

Definition and Basis of Presentation

     The Company believes that FFO, which is a non-GAAP financial measure, provides an additional and useful means to assess the financial performance of REITs. FFO is frequently used by securities analysts, investors and other interested parties to evaluate the performance of REITs, most of which present FFO along with net income as calculated in accordance with GAAP.

     FFO excludes GAAP historical cost depreciation and amortization of real estate and real estate investments, which assumes that the value of real estate assets diminishes ratably over time. Historically, however, real estate values have risen or fallen with market conditions, and many companies use different depreciable lives and methods. Because FFO excludes depreciation and amortization unique to real estate, gains and certain losses from depreciable property dispositions, and extraordinary items, it can provide a performance measure that, when compared year over year,

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reflects the impact on operations from trends in occupancy rates, rental rates, operating costs, acquisition and development activities and financing costs. This provides a perspective of the Company’s financial performance not immediately apparent from net income determined in accordance with GAAP.

     FFO is generally defined and calculated by the Company as net income (loss), adjusted to exclude (i) preferred share dividends, (ii) gains from disposition of depreciable real estate property, except for those properties sold through the Company’s merchant building program, which are presented net of taxes, and those gains that represent the recapture of a previously recognized impairment charge, (iii) extraordinary items and (iv) certain non-cash items. These non-cash items principally include real property depreciation, equity income (loss) from joint ventures and equity income (loss) from non-controlling interests, and adding the Company’s proportionate share of FFO from its unconsolidated joint ventures and non-controlling interests, determined on a consistent basis. For the periods presented below, the Company’s calculation of FFO is consistent with the definition of FFO provided by the National Association of Real Estate Investment Trusts (NAREIT) as there were no gains generated from the Company’s merchant building program.

     During 2008, due to the volatility and volume of significant accounting charges and gains recorded in the Company’s operating results that were not reflective of the Company’s core operating performance, management began computing Operating FFO and discussing it with the users of the Company’s financial statements, in addition to other measures such as net income/loss determined in accordance with GAAP as well as FFO. Operating FFO is generally calculated by the Company as FFO excluding certain charges and gains that management believes are not indicative of the results of the Company’s operating real estate portfolio. The disclosure of these charges and gains are regularly requested by users of the financial statements.

     Operating FFO is a non-GAAP financial measure, and, as described above, its use combined with the required primary GAAP presentations has been beneficial to management in improving the understanding of the Company’s operating results among the investing public and making comparisons of other REITs’ operating results to the Company’s more meaningful. The adjustments may not be comparable to how other REITs or real estate companies calculate their results of operations, and the Company’s calculation of Operating FFO differs from NAREIT’s definition of FFO. The Company will continue to evaluate the usefulness and relevance of the reported non-GAAP measures, and such reported measures could change. Additionally, the Company provides no assurances that these charges and gains are non-recurring. These charges and gains could be reasonably expected to recur in future results of operations.

     These measures of performance are used by the Company for several business purposes and by other REITs. The Company uses FFO and/or Operating FFO in part (i) as a measure of a real estate asset’s performance, (ii) to influence acquisition, disposition and capital investment strategies, and (iii) to compare the Company’s performance to that of other publicly traded shopping center REITs.

     For the reasons described above, management believes that FFO and Operating FFO provide the Company and investors with an important indicator of the Company’s operating performance. It provides a recognized measure of performance other than GAAP net income, which may include non-cash items (often significant). Other real estate companies may calculate FFO and Operating FFO in a different manner.

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     Management recognizes FFO’s and Operating FFO’s limitations when compared to GAAP’s income from continuing operations. FFO and Operating FFO do not represent amounts available for needed dividends, capital replacement or expansion, debt service obligations, or other commitments and uncertainties. Management does not use FFO or Operating FFO as an indicator of the Company’s cash obligations and funding requirements for future commitments, acquisitions or development activities. Neither FFO nor Operating FFO represents cash generated from operating activities in accordance with GAAP and neither is necessarily indicative of cash available to fund cash needs, including the payment of dividends. Neither FFO nor Operating FFO should be considered an alternative to net income (computed in accordance with GAAP) or as an alternative to cash flow as a measure of liquidity. FFO and Operating FFO are simply used as additional indicators of the Company’s operating performance. The Company believes that to further understand its performance operating FFO should be compared with the Company’s reported net income (loss) and considered in addition to cash flows in accordance with GAAP, as presented in its consolidated financial statements.

Reconciliation Presentation

     For the three-month period ended March 31, 2011, FFO applicable to DDR common shareholders was $89.1 million, compared to $28.4 million for the same period in 2010. The increase in FFO for the three-month period ended March 31, 2011, was primarily the result of the gain on change in control of interests relating to the Company’s acquisition of two assets from unconsolidated joint ventures and the effect of the valuation adjustments associated with the warrants that were exercised in full for cash in the first quarter of 2011, partially offset by an executive separation charge. For the three-month period ended March 31, 2011, Operating FFO applicable to DDR common shareholders was $63.2 million, compared to $65.2 million for the same period in 2010. The decrease in Operating FFO for the three-month period ended March 31, 2011, was primarily the result of higher operating expenses partially offset by the impact of property sales.

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     The Company’s reconciliation of net income (loss) applicable to DDR common shareholders to FFO applicable to DDR common shareholders and Operating FFO applicable to common shareholders is as follows (in thousands):

	Three-Month Periods Ended
	March 31,
	2011			2010
Net income (loss) applicable to DDR common shareholders (A)	$	24,745		$	(34,814	)
Depreciation and amortization of real estate investments		53,803			54,594
Equity in net income of joint ventures		(1,974	)		(1,647	)
Joint ventures’ FFO (B)		12,808			11,555
Non-controlling interests (OP Units)		16			8
Gain on disposition of depreciable real estate (C)		(311	)		(1,267	)
FFO applicable to DDR common shareholders	$	89,087		$	28,429
Total non-operating items (D)		(25,896	)		36,751
Operating FFO applicable to DDR common shareholders	$	63,191		$	65,180

(A)	Includes the deduction of preferred dividends of $10.6 million for each of the three-month periods ended March 31, 2011 and 2010, respectively. Includes straight-line rental revenue of approximately $0.3 million and $1.0 million for the three-month periods ended March 31, 2011 and 2010, respectively (including discontinued operations). In addition, includes straight-line ground rent expense of approximately $0.5 million for both the three-month periods ended March 31, 2011 and 2010.
(B)	At March 31, 2011 and 2010, the Company had an investment in joint ventures relating to 191 and 213 operating shopping center properties, respectively. These joint ventures represent the investments in which the Company was recording equity in net income and accordingly, FFO.
	Joint ventures’ FFO is summarized as follows (in thousands):

	Three-Month Periods Ended
	March 31,
	2011			2010
Net loss (1)	$	(3,929	)	$	(16,850	)
Depreciation and amortization of real estate investments		47,836			50,314
FFO	$	43,907		$	33,464
FFO at DDR ownership interests	$	12,808		$	11,555

(1) Revenues for the three-month periods include the following (in millions):

	Three-Month Periods
	Ended March 31,
	2011		2010
Straight-line rents	$	0.6	$	1.2
DDR’s proportionate share	$	0.1	$	0.2

(C)

The amount reflected as gains on disposition of real estate and real estate investments from continuing operations in the consolidated statements of operations includes residual land sales, which management considers being the disposition of non-depreciable real property. These dispositions are included in the Company’s FFO and therefore are not reflected as an adjustment to FFO. For the three-month period ended March 31, 2011, net gains resulting from residual land sales aggregated $0.9 million (none in 2010).

(D)

Amounts are described below in the Operating FFO Adjustments section.

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Operating FFO Adjustments

     The Company’s adjustments to arrive at Operating FFO are comprised of the following for the three months ended March 31, 2011 and 2010 (in millions). The Company provides no assurances that these charges and gains are non-recurring. These charges and gains could be reasonably expected to recur in future results of operations.

	For the Three-Month
	Periods Ended March 31,
	2011			2010
Impairment charges — consolidated assets (A)	$	3.8		$	0.8
Employee separation charges (B)		10.7			2.1
Gain on debt retirement, net (A)		—			(1.1	)
(Gain) loss on equity derivative instruments (A)		(21.9	)		24.9
Other (income) expense, net (C)		(1.3	)		3.1
Equity in net income of joint ventures — loss on asset sales and impairment charges		1.6			1.3
Gain on change in control of interests (A)		(21.7	)		—
Discontinued operations — consolidated impairment charges and loss on sales		1.9			3.7
Discontinued operations — FFO associated with Mervyns Joint Venture, net of non-controlling interest		—			2.0
Loss on disposition of real estate (land), net		1.0			—
Total non—operating items	$	(25.9	)	$	36.8
FFO applicable to DDR common shareholders		89.1			28.4
Operating FFO applicable to DDR common shareholders	$	63.2		$	65.2

(A)	Amount agrees to the face of the consolidated statements of operations.
(B)	Amounts included in general and administrative expenses.
(C)	Amounts included in other (income) expenses in the consolidated statements of operations and detailed as follows:

	For the Three-Month
	Periods Ended March 31,
	2011			2010
Litigation-related expenses, net of tax	$	1.0		$	1.7
Debt extinguishment costs		0.2			1.1
Abandoned projects and other expenses		—			0.4
Settlement of lease liability obligation and other		(2.5	)		(0.1	)
	$	(1.3	)	$	3.1

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Liquidity and Capital Resources

     The Company periodically evaluates opportunities to issue and sell additional debt or equity securities, obtain credit facilities from lenders, or repurchase, refinance or otherwise restructure long-term debt for strategic reasons, or to further strengthen the financial position of the Company. In 2011, the Company continued to strategically allocate cash flow from operating and financing activities. The Company completed public debt and equity offerings in order to strengthen the balance sheet and improve its financial flexibility.

     The Company’s and its unconsolidated debt obligations generally require monthly payments of principal and/or interest over the term of the obligation. No assurance can be provided that these obligations will be refinanced or repaid as currently anticipated. Also, additional financing may not be available at all or on terms favorable to the Company or its joint ventures (see Contractual Obligations and Other Commitments).

     The Company maintains an unsecured revolving credit facility with a syndicate of financial institutions, arranged by JP Morgan Chase Bank, N.A. and Wells Fargo Bank, N.A. (the “Unsecured Credit Facility”). The Unsecured Credit Facility provides for borrowings of $950 million, if certain financial covenants are maintained, and an accordion feature for expansion to $1.2 billion upon the Company’s request, provided that new or existing lenders agree to the existing terms of the facility and increase their commitment level. The Company also maintains a $65 million unsecured revolving credit facility with PNC Bank, N.A. (the “PNC Facility” and, together with the Unsecured Credit Facility, the “Revolving Credit Facilities”). The PNC Facility reflects terms consistent with those contained in the Unsecured Credit Facility.

     The Revolving Credit Facilities and the indentures under which the Company’s senior and subordinated unsecured indebtedness is, or may be, issued contain certain financial and operating covenants and require the Company to comply with certain covenants including, among other things, leverage ratios and debt service coverage and fixed charge coverage ratios, as well as limitations on the Company’s ability to incur secured and unsecured indebtedness, sell all or substantially all of the Company’s assets, and engage in mergers and certain acquisitions. These credit facilities and indentures also contain customary default provisions including the failure to make timely payments of principal and interest payable thereunder, the failure to comply with the Company’s financial and operating covenants, the occurrence of a material adverse effect on the Company, and the failure of the Company or its majority-owned subsidiaries (i.e., entities in which the Company has a greater than 50% interest) to pay when due certain indebtedness in excess of certain thresholds beyond applicable grace and cure periods. In the event the Company’s lenders or note holders declare a default, as defined in the applicable debt documentation, this could result in the Company’s inability to obtain further funding and/or an acceleration of any outstanding borrowings. As of March 31, 2011, the Company was in compliance with all of its financial covenants. Although the Company intends to operate in compliance with these covenants, if the Company were to violate these covenants, the Company may be subject to higher finance costs and fees or accelerated maturities. The Company’s current business plans indicate that it will continue to be able to operate in compliance with these covenants for the remainder of 2011 and beyond.

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     Certain of the Company’s credit facilities and indentures permit the acceleration of the maturity of the underlying debt in the event certain other debt of the Company has been accelerated. Furthermore, a default under a loan to the Company or its affiliates, a foreclosure on a mortgaged property owned by the Company or its affiliates or the inability to refinance existing indebtedness may have a negative impact on the Company’s financial condition, cash flows and results of operations. These facts, and an inability to predict future economic conditions, have encouraged the Company to adopt a strict focus on lowering leverage and increasing financial flexibility.

     The Company expects to fund its obligations from available cash, current operations and utilization of its Revolving Credit Facilities. The following information summarizes the availability of the Revolving Credit Facilities at March 31, 2011 (in millions):

Cash and cash equivalents	$	21.0
Revolving Credit Facilities	$	1,015.0
Less:
Amount outstanding		(42.7	)
Letters of credit		(12.3	)
Borrowing capacity available	$	960.0

     Additionally, as of April 29, 2011, the Company had $200 million available for the future issuance of its common shares under its continuous equity program.

     As of March 31 2011, the Company also had unencumbered consolidated operating properties generating income in excess of the amounts required by the Revolving Credit Facilities covenants, thereby providing a potential collateral base for future borrowings or to sell to generate cash proceeds, subject to consideration of the financial covenants on its unsecured borrowings.

     The Company intends to continue implementing a longer-term financing strategy and reduce its reliance on short-term debt. The Company believes its Revolving Credit Facilities should be appropriately sized for the Company’s liquidity strategy and longer-term capital structure needs.

     Part of the Company’s overall strategy includes addressing debt maturing in 2011 and years following well before the maturity date. In March 2011, the Company issued $300 million aggregate principal amount of 4.75% senior unsecured notes due April 2018. Net proceeds from the offering were used to repay short-term, higher cost mortgage debt and to reduce balances on its Revolving Credit Facilities and secured term loan.

     In March 2011, the Otto Family exercised their warrants for 10 million common shares for cash proceeds of $60 million. Also in March 2011, the Company entered into forward sale agreements to sell an aggregate of 9.5 million of its common shares for $130.2 million, or $13.71 per share, which settled in April 2011. The net proceeds from the issuance of these common shares were used to redeem $180 million of the Company’s 8% Class G preferred shares in April 2011. Any excess proceeds were used for general corporate purposes.

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     In February 2011, the Company executed the extension option of its term loan with KeyBank, N.A. to extend the maturity date to February 2012. The Company is in discussions with certain banks and expects to refinance this term loan by the end of 2011, but there can be no assurance that the refinancing can be done on satisfactory terms or at all.

     The Company is focused on the timing and deleveraging opportunities for the consolidated debt maturing in 2011 and expects to begin addressing 2012 maturities as well. The wholly-owned maturities for 2011 include the unsecured notes due and repaid in April 2011 aggregating $93.0 million and unsecured convertible notes due in August 2011 with an aggregate principal amount of $88.7 million. Mortgage debt maturities aggregate approximately $71.0 million, of which $35.5 million was extended for one year in April 2011. The unsecured convertible notes and the remaining mortgage debt maturing in 2011 are expected to be repaid from operating cash flow, borrowings under the Revolving Credit Facilities and asset disposition proceeds. The Company continually evaluates its debt maturities and, based on management’s current assessment, believes it has viable financing and refinancing alternatives.

     The Company continues to look beyond 2011 to ensure that it executes its strategy to lower leverage, increase liquidity, improve the Company’s credit ratings and extend debt duration with the goal of lowering the Company’s risk profile and long-term cost of capital.

Unconsolidated Joint Ventures

     At April 29, 2011, the Company’s unconsolidated joint venture mortgage debt that had matured and is now past due is as follows:

			Company’s
	Debt Matured		Proportionate
Unconsolidated Joint Ventures	(Millions)		Share (Millions)
Coventry II (A)	$	39.6	$	—
Other (B)		7.4		1.1
	$	47.0	$	1.1

(A)	See Off-Balance Sheet Arrangements
(B)	In accordance with the terms of a consensual foreclosure agreement entered into between the borrower and the servicer of the loan, a foreclosure complaint was approved by the applicable circuit court in March 2011. The foreclosure is proceeding in the ordinary course in accordance with governing state law and is expected to be finalized in the second quarter of 2011.

     At March 31, 2011, the Company’s unconsolidated joint venture mortgage debt maturing in 2011 was $641.6 million (of which the Company’s proportionate share is $217.6 million). Of this amount, $266.3 million (of which the Company’s proportionate share is $53.3 million) was attributable to the Coventry II Fund assets (see Off-Balance Sheet Arrangements). Additionally, $158.4 million of mortgage debt was refinanced in April 2011, of which $141.3 million was attributable to the Coventry II Fund assets (of which the Company’s proportionate share is $28.3 million).

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Cash Flow Activity

     The Company’s core business of leasing space to well-capitalized retailers continues to generate consistent and predictable cash flow after expenses, interest payments and preferred share dividends. This capital is available for use at the Company’s discretion for investment, debt repayment and the payment of dividends on the common shares.

     The Company’s cash flow activities are summarized as follows (in thousands):

	Three-Month Periods Ended
	March 31,
	2011			2010
Cash flow provided by operating activities	$	60,373		$	44,304
Cash flow (used for) provided by investing activities		(6,227	)		34,687
Cash flow used for financing activities		(52,618	)		(79,419	)

     Operating Activities: The increase in cash flow from operating activities for the three months ended March 31, 2011, as compared to the same period in 2010, was primarily due to an increase in accounts payable and accrued expenses.

     Investing Activities: The change in cash flow from investing activities for the three months ended March 31, 2011, as compared to the same period in 2010, was primarily due to the change in restricted cash as well as a decrease in the amount of asset sale proceeds, partially offset by an increase in proceeds from note repayments from unconsolidated joint ventures.

     Financing Activities: The change in cash flow used for financing activities for the three months ended March 31, 2011, as compared to the same period in 2010, was primarily due to a decrease in proceeds received from the issuance of common shares partially offset by a decrease in the level of debt repayments.

     The Company satisfied its REIT requirement of distributing at least 90% of ordinary taxable income with declared common and preferred share cash dividends of $22.0 million for the three months ended March 31, 2011, as compared to $15.6 million of dividends paid for the same period in 2010. Because actual distributions were greater than 100% of taxable income, federal income taxes have not been incurred by the Company thus far during 2011.

     The Company declared a quarterly dividend of $0.04 per common share for the first quarter of 2011. The Company will continue to monitor the 2011 dividend policy and provide for adjustments, as determined to be in the best interests of the Company and its shareholders to maximize the Company’s free cash flow while still adhering to REIT payout requirements.

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Sources and Uses of Capital

Acquisitions

     The Company has a portfolio management strategy to recycle capital from lower quality, lower growth potential assets into prime assets with long-term growth potential. As part of that strategy, the Company acquired its partners’ 50% ownership interests in two shopping centers for $40 million during the first quarter of 2011. As a result of the transactions, the Company now owns 100% of the two prime shopping centers. The aggregate gross value of the shopping centers is $80 million, and a new $21.0 million, eleven-year mortgage encumbers one of the assets. The Company recorded an aggregate gain of approximately $21.7 million in connection with the acquisitions related to the step-up of its investment basis to fair value due to the change in control that occurred.

Dispositions

     During the three-month period ended March 31, 2011, the Company sold one shopping center property and one office property, aggregating 0.1 million square feet, at an aggregate sales price of $5.3 million. The Company recorded a net gain of $0.2 million, which excludes the impact of $3.3 million in related impairment charges that were recorded in 2010. In the first quarter of 2011, two of the Company’s joint ventures sold two shopping centers, aggregating approximately 0.3 million square feet, generating gross proceeds of approximately $29.7 million. The joint ventures recorded an aggregate net loss of approximately $0.9 million related to these asset sales, of which the Company recorded a net loss of approximately $1.9 million related to the write-off of its basis in the investments.

     As part of the Company’s portfolio management strategy, the Company has been marketing non-prime assets for sale. The Company is focusing on selling single-tenant assets and/or smaller shopping centers that do not meet the Company’s current business strategy. For certain real estate assets for which the Company has entered into agreements that are subject to contingencies, including contracts executed subsequent to March 31, 2011, a loss of approximately $10 million could be recorded if all such sales were consummated on the terms currently being negotiated. Given the Company’s experience over the past few years, it is difficult for many buyers to complete these transactions in the timing contemplated or at all. The Company has not recorded an impairment charge on these assets at March 31, 2011, as the undiscounted cash flows, when considering and evaluating the various alternative courses of action that may occur, exceed the assets’ current carrying value. The Company evaluates all potential sale opportunities taking into account the long-term growth prospects of assets being sold, the use of proceeds and the impact to the Company’s balance sheet, in addition to the impact on operating results. As a result, if actual results differ from expectations, it is possible that additional assets could be sold in subsequent periods for a loss after taking into account the above considerations.

Developments, Redevelopments and Expansions

     In 2011, the Company expects to expend an aggregate of approximately $80.5 million, net, of which approximately $13.4 million, net, was spent through March 31, 2011 to develop, expand, improve and re-tenant various consolidated properties as part of its portfolio management strategy.

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     The Company will continue to closely monitor its spending in 2011 for developments and redevelopments, both for consolidated and unconsolidated projects, as the Company considers this funding to be discretionary spending. The Company does not anticipate expending a significant amount of funds on joint venture development projects in 2011. One of the important benefits of the Company’s asset class is the ability to phase development projects over time until appropriate leasing levels can be achieved. To maximize the return on capital spending and balance the Company’s de-leveraging strategy, the Company adheres to strict investment criteria thresholds. The revised underwriting criteria followed over the past two years includes a higher cash-on-cost project return threshold, and incorporates a longer period before the leases commence and a higher stabilized vacancy rate. The Company applies this revised strategy to both its consolidated and certain unconsolidated joint ventures that own assets under development because the Company has significant influence and, in most cases, approval rights over decisions relating to significant capital expenditures.

     The Company has two consolidated projects that are being developed in phases at a projected aggregate net cost of approximately $204.0 million. At March 31, 2011, approximately $188.7 million of costs had been incurred in relation to these projects. The Company is also currently expanding/redeveloping five wholly-owned shopping center developments at a projected aggregate net cost of approximately $71.0 million. At March 31, 2011, approximately $51.6 million of costs had been incurred in relation to these redevelopment projects.

     At March 31, 2011, the Company has approximately $527.2 million of recorded costs related to land and projects under development, for which active construction has temporarily ceased or had not yet commenced. Based on the Company’s current intentions and business plans, the Company believes that the expected undiscounted cash flows exceed its current carrying value on each of these projects. However, if the Company were to dispose of certain of these assets in the current market, the Company would likely incur a loss, which may be material. The Company evaluates its intentions with respect to these assets each reporting period and records an impairment charge equal to the difference between the current carrying value and fair value when the expected undiscounted cash flows are less than the asset’s carrying value.

     The Company and its joint venture partners intend to commence construction on various other developments, only after substantial tenant leasing has occurred and acceptable construction financing is available.

Off-Balance Sheet Arrangements

     The Company has a number of off-balance sheet joint ventures and other unconsolidated entities with varying economic structures. Through these interests, the Company has investments in operating properties, development properties and two management and development companies. Such arrangements are generally with institutional investors and various developers located throughout the United States.

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     The unconsolidated joint ventures that have total assets greater than $250 million (based on the historical cost of acquisition by the unconsolidated joint venture) at March 31, 2011, are as follows:

					Company-
	Effective				Owned Square
Unconsolidated Real Estate	Ownership				Feet		Total Debt
Ventures	Percentage(A)			Assets Owned	(Millions)		(Millions)
DDRTC Core Retail Fund LLC		15.0	%	42 shopping centers in several states		11.7	$	1,221.0
DDR Domestic Retail Fund I		20.0	%	63 shopping centers in several states		8.3		965.2
Sonae Sierra Brasil BV Sarl		33.3	%	10 shopping centers, a management company and three development projects in Brazil		3.9		117.3
DDR — SAU Retail Fund LLC		20.0	%	27 shopping centers in several states		2.4		183.1

(A) Ownership may be held through different investment structures. Percentage ownerships are subject to change, as certain investments contain promoted structures.

Funding for Unconsolidated Joint Ventures

     The Company has provided loans and advances to certain unconsolidated entities and/or related partners in the amount of $71.1 million at March 31, 2011, for which the Company’s joint venture partners have not funded their proportionate share. Included in this amount, the Company advanced $66.9 million of financing to one of its unconsolidated joint ventures, which accrued interest at the greater of LIBOR plus 700 basis points, or 12%, and a default rate of 16%, and has an initial maturity of July 2011. The Company reserved this advance in full in 2009 (see Coventry II Fund discussion below).

Coventry II Fund

     At March 31, 2011, the Company maintains several investments with the Coventry II Fund. The Company co-invested approximately 20% in each joint venture and is generally responsible for day-to-day management of the properties. Pursuant to the terms of the joint venture, the Company earns fees for property management, leasing and construction management. The Company also could earn a promoted interest, along with Coventry Real Estate Advisors L.L.C., above a preferred return after return of capital to fund investors (see Legal Matters).

     As of March 31, 2011, the aggregate carrying amount of the Company’s net investment in the Coventry II Fund joint ventures was approximately $9.8 million. The Company has also advanced $66.9 million of financing to one of the Coventry II Fund joint ventures, Coventry II DDR Bloomfield, relating to the development of the project in Bloomfield Hills, Michigan (“Bloomfield Loan”). In addition to its existing equity and note receivable, the Company has provided partial payment guaranties to third-party lenders in connection with the financing for five of the Coventry II Fund projects. The amount of each such guaranty is not greater than the proportion to the Company’s investment percentage in the underlying projects, and the aggregate amount of the Company’s guaranties is approximately $39.9 million at March 31, 2011.

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     Although the Company will not acquire additional investments through the Coventry II Fund joint ventures, additional funds may be required to address ongoing operational needs and costs associated with the joint ventures undergoing development or redevelopment. The Coventry II Fund is exploring a variety of strategies to obtain such funds, including potential dispositions and financings. The Company continues to maintain the position that it does not intend to fund any of its joint venture partners’ capital contributions or their share of debt maturities.

     A summary of the Coventry II Fund investments is as follows:

	Shopping Center or	Loan Balance
Unconsolidated Real Estate Ventures	Development Owned	Outstanding
Coventry II DDR Bloomfield LLC	Bloomfield Hills, Michigan	$	39.6	(A), (B), (D), (E)
Coventry II DDR Buena Park LLC	Buena Park, California		61.0	(B)
Coventry II DDR Fairplain LLC	Benton Harbor, Michigan		15.6	(B), (C)
Coventry II DDR Phoenix Spectrum LLC	Phoenix, Arizona		65.0
Coventry II DDR Marley Creek Square LLC	Orland Park, Illinois		10.7	(B), (C), (E)
Coventry II DDR Montgomery Farm LLC	Allen, Texas		141.3	(B), (C)
Coventry II DDR Totem Lakes LLC	Kirkland, Washington		27.8	(B), (C), (E)
Coventry II DDR Westover LLC	San Antonio, Texas		20.5	(B)
Coventry II DDR Tri-County LLC	Cincinnati, Ohio		161.2	(B), (D), (E)
Service Holdings LLC	38 retail sites in several states		96.3	(B), (C), (E)

(A)	In 2009, the senior secured lender sent to the borrower a formal notice of default and filed a foreclosure action. The Company paid its 20% guaranty of this loan in 2009, and the senior secured lender initiated legal proceedings against the Coventry II Fund for its failure to fund its 80% payment guaranty. The above-referenced $66.9 million Bloomfield Loan from the Company relating to the Bloomfield Hills, Michigan, project is cross-defaulted with this third-party loan. This Bloomfield Loan is considered past due and has been fully reserved by the Company.
(B)	As of March 31, 2011, lenders are managing the cash receipts and expenditures related to the assets collateralizing these loans.
(C)	As of March 31, 2011, the Company provided payment guaranties that are not greater than the proportion to its investment interest.
(D)	As of April 29, 2011, these loans are in default, and the Coventry II Fund is exploring a variety of strategies with the lenders.
(E)	The Company has written its investment basis in this joint venture down to zero and is no longer reporting an allocation of income or loss.

Other Joint Ventures

     The Company is involved with overseeing the development activities for several of its unconsolidated joint ventures that are constructing, redeveloping or expanding shopping centers. The Company earns a fee for its services commensurate with the level of oversight provided. The Company generally provides a completion guaranty to the third-party lending institution(s) providing construction financing.

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     The Company’s unconsolidated joint ventures had aggregate outstanding indebtedness to third parties of approximately $3.9 billion and $4.2 billion at March 31, 2011 and 2010, respectively (see Item 3. Quantitative and Qualitative Disclosures About Market Risk). Such mortgages and construction loans are generally non-recourse to the Company and its partners; however, certain mortgages may have recourse to the Company and its partners in certain limited situations, such as misuse of funds and material misrepresentations. In connection with certain of the Company’s unconsolidated joint ventures, the Company agreed to fund any amounts due to the joint venture’s lender if such amounts are not paid by the joint venture based on the Company’s pro rata share of such amount which aggregated $41.7 million at March 31, 2011, including guaranties associated with the Coventry II Fund joint ventures.

     On February 2, 2011, the Company’s unconsolidated joint venture, Sonae Sierra Brasil (BM&FBOVESPA: SSBR3), completed an initial public offering of its common shares on the Sao Paulo Stock Exchange. The total proceeds raised of approximately US$280 million from the initial public offering will be used primarily to fund future developments and expansions, as well as repay a loan from its parent company, in which DDR owns a 50% interest. Our proportionate share of the loan repayment proceeds was approximately US$22.4 million. As a result of the initial public offering, the Company’s effective ownership interest in Sonae Sierra Brasil was reduced from 48% to approximately 33%.

     The Company has generally chosen not to mitigate any of the residual foreign currency risk through the use of hedging instruments for Sonae Sierra Brasil. The Company will continue to monitor and evaluate this risk and may enter into hedging agreements at a later date.

     The Company has interests in consolidated joint ventures that own real estate assets in Canada and Russia. The net assets of these subsidiaries are exposed to volatility in currency exchange rates. As such, the Company uses non-derivative financial instruments to hedge this exposure. The Company manages currency exposure related to the net assets of the Company’s Canadian and European subsidiaries primarily through foreign currency-denominated debt agreements that the Company enters into. Gains and losses in the parent company’s net investments in its subsidiaries are economically offset by losses and gains in the parent company’s foreign currency-denominated debt obligations.

     For the three months ended March 31, 2011, $5.6 million of net losses related to the foreign currency-denominated debt agreements were included in the Company’s cumulative translation adjustment. As the notional amount of the non-derivative instrument substantially matches the portion of the net investment designated as being hedged and the non-derivative instrument is denominated in the functional currency of the hedged net investment, the hedge ineffectiveness recognized in earnings was not material.

Financing Activities

     The Company has historically accessed capital sources through both the public and private markets. The Company’s acquisitions, developments, redevelopments and expansions are generally financed through cash provided from operating activities, revolving credit facilities, mortgages assumed, construction loans, secured debt, unsecured debt, common and preferred equity offerings,

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joint venture capital, preferred OP Units and asset sales. Total consolidated debt outstanding was $4.3 billion at March 31, 2011 and December 31, 2010 as compared to $4.7 billion at March 31, 2010.

     In February 2011, the Company executed the extension option of its term loan with KeyBank, N.A. to extend the maturity date to February 2012.

     In March 2011, the Company issued $300 million aggregate principal amount of 4.75% senior unsecured notes due April 2018. Net proceeds from the offering were used to repay short-term, higher cost mortgage debt and to reduce balances on its Revolving Credit Facilities and secured term loan.

     In March 2011, the Otto Family exercised their warrants for 10 million common shares for cash proceeds of $60 million. Also in March 2011, the Company entered into forward sale agreements to sell an aggregate of 9.5 million of its common shares for $130.2 million, or $13.71 per share, which settled in April 2011. The net proceeds from the issuance of these common shares were used to redeem $180 million of the Company’s 8% Class G preferred shares in April 2011. Any excess proceeds were used for general corporate purposes.

Capitalization

     At March 31, 2011, the Company’s capitalization consisted of $4.3 billion of debt, $555 million of preferred shares and $3.7 billion of market equity (market equity is defined as common shares and OP Units outstanding multiplied by $14.00, the closing price of the Company’s common shares on the New York Stock Exchange at March 31, 2011), resulting in a debt to total market capitalization ratio of 0.50 to 1.0, as compared to a ratio of 0.57 to 1.0 at March 31, 2010. The closing price of the common shares on the New York Stock Exchange was $12.17 at March 31, 2010. At March 31, 2011, the Company’s total debt consisted of $3.7 billion of fixed-rate debt and $0.6 billion of variable-rate debt, including $185 million of variable-rate debt that had been effectively swapped to a fixed rate through the use of interest rate derivative contracts. At March 31, 2010, the Company’s total debt consisted of $3.8 billion of fixed-rate debt and $0.9 billion of variable-rate debt, including $400.0 million of variable-rate debt that had been effectively swapped to a fixed rate through the use of interest rate derivative contracts.

     It is management’s current strategy to have access to the capital resources necessary to manage its balance sheet, to repay upcoming maturities and to consider making prudent opportunistic investments. Accordingly, the Company may seek to obtain funds through additional debt or equity financings and/or joint venture capital in a manner consistent with its intention to operate with a conservative debt capitalization policy and to reduce the Company’s cost of capital by maintaining an investment grade rating with Moody’s and re-establishing an investment grade rating with S&P and Fitch. The security rating is not a recommendation to buy, sell or hold securities, as it may be subject to revision or withdrawal at any time by the rating organization. Each rating should be evaluated independently of any other rating. The Company may not be able to obtain financing on favorable terms, or at all, which may negatively affect future ratings.

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Contractual Obligations and Other Commitments

     The Company is focused on the timing and deleveraging opportunities for the consolidated debt maturing in 2011. The wholly-owned maturities for 2011 include the unsecured notes due and repaid in April 2011 aggregating $93.0 million and unsecured convertible notes due in August 2011 with an aggregate principal amount of $88.7 million and mortgage maturities of approximately $71.0 million. The Company expects to repay this indebtedness through new debt, extension of existing lending options, refinancing or using the availability on its Revolving Credit Facilities. No assurance can be provided that the aforementioned obligations will be refinanced or repaid as anticipated (see Liquidity and Capital Resources).

     At March 31, 2011, the Company had letters of credit outstanding of approximately $34.6 million. The Company has not recorded any obligations associated with these letters of credit. The majority of letters of credit are collateral for existing indebtedness and other obligations of the Company.

     In conjunction with the development of shopping centers, the Company has entered into commitments aggregating approximately $12.4 million with general contractors for its wholly-owned and consolidated joint venture properties at March 31, 2011. These obligations, comprised principally of construction contracts, are generally due in 12 to 18 months, as the related construction costs are incurred, and are expected to be financed through operating cash flow, new or existing construction loans, assets sales or revolving credit facilities.

     The Company routinely enters into contracts for the maintenance of its properties, which typically can be cancelled upon 30 to 60 days notice without penalty. At March 31, 2011, the Company had purchase order obligations, typically payable within one year, aggregating approximately $5.3 million related to the maintenance of its properties and general and administrative expenses.

Inflation

     Most of the Company’s long-term leases contain provisions designed to mitigate the adverse impact of inflation. Such provisions include clauses enabling the Company to receive additional rental income from escalation clauses that generally increase rental rates during the terms of the leases and/or percentage rentals based on tenants’ gross sales. Such escalations are determined by negotiation, increases in the consumer price index or similar inflation indices. In addition, many of the Company’s leases are for terms of less than 10 years, permitting the Company to seek increased rents at market rates upon renewal. Most of the Company’s leases require the tenants to pay their share of operating expenses, including common area maintenance, real estate taxes, insurance and utilities, thereby reducing the Company’s exposure to increases in costs and operating expenses resulting from inflation.

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Economic Conditions

     The retail market in the United States significantly weakened in 2008 and continued to be challenged in 2009. Retail sales declined and tenants became more selective for new store openings. Some retailers closed existing locations and, as a result, the Company experienced a loss in occupancy compared to its historic levels. The reduction in occupancy in 2009 has continued to have a negative impact on the Company’s consolidated cash flows, results of operations and financial position in 2011. However, the Company believes there is an improvement in the level of optimism within its tenant base. Many retailers have executed contracts in 2010 and 2011 to open new stores and have strong store opening plans for 2012 and 2013. The lack of new supply is causing retailers to reconsider opportunities to open new stores in quality locations in well positioned shopping centers. The Company continues to see strong demand from a broad range of retailers, particularly in the off-price sector, which is a reflection on the general outlook of consumers who are responding to the broader economic uncertainty by demanding more value for their dollars. Offsetting some of the impact resulting from the reduced occupancy is that the Company has a low occupancy cost relative to other retail formats and historic averages, as well as a diversified tenant base with only one tenant exceeding 2.5% of total 2011 consolidated revenues (Walmart at 4.8%). Other significant tenants include Target, Lowe’s, Home Depot, Kohl’s, T.J. Maxx/Marshalls, Publix Supermarkets, PetSmart and Bed Bath & Beyond, all of which have relatively strong credit ratings, remain well-capitalized and have outperformed other retail categories on a relative basis over time. The Company believes these tenants should continue providing it with a stable revenue base for the foreseeable future, given the long-term nature of these leases. Moreover, the majority of the tenants in the Company’s shopping centers provide day-to-day consumer necessities with a focus toward value and convenience versus high-priced discretionary luxury items, which the Company believes will enable many of the tenants to continue operating within this challenging economic environment.

     The Company consistently monitors potential credit issues of its tenants, and analyzes their possible impact on the financial statements of the Company and its unconsolidated joint ventures. In addition to the collectibility assessment of outstanding accounts receivable, the Company evaluates the related real estate for recoverability, as well as any tenant-related deferred charges for recoverability, which may include straight-line rents, deferred lease costs, tenant improvements, tenant inducements and intangible assets (“Tenant-Related Deferred Charges”). The Company routinely evaluates its exposure relating to tenants in financial distress. Where appropriate, the Company has either written off the unamortized balance or accelerated depreciation and amortization expense associated with the Tenant-Related Deferred Charges for such tenants.

     The retail shopping sector has been affected by the competitive nature of the retail business and the competition for market share as well as general economic conditions where stronger retailers have out-positioned some of the weaker retailers. These shifts have forced some market share away from weaker retailers and required them, in some cases, to declare bankruptcy and/or close stores. Certain retailers have announced store closings even though they have not filed for bankruptcy protection. However, these store closings often represent a relatively small percentage of the Company’s overall GLA and, therefore, the Company does not expect these closings to have a material adverse effect on the Company’s overall long-term performance. Overall, the Company’s portfolio remains stable. However, there can be no assurance that these events will not adversely

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affect the Company (see Item 1A. Risk Factors in the Company’s Annual Report of Form 10-K for the year ended December 31, 2010).

     Historically, the Company’s portfolio has performed consistently throughout many economic cycles, including downward cycles. Broadly speaking, national retail sales have grown since World War II, including during several recessions and housing slowdowns. In the past, the Company has not experienced significant volatility in its long-term portfolio occupancy rate. The Company has experienced downward cycles before and has made the necessary adjustments to leasing and development strategies to accommodate the changes in the operating environment and mitigate risk. In many cases, the loss of a weaker tenant creates an opportunity to re-lease space at higher rents to a stronger retailer. More importantly, the quality of the property revenue stream is high and consistent, as it is generally derived from retailers with good credit profiles under long-term leases, with very little reliance on overage rents generated by tenant sales performance. The Company believes that the quality of its shopping center portfolio is strong, as evidenced by the high historical occupancy rates, which have generally ranged from 92% to 96% since the Company’s initial public offering in 1993. Although the Company experienced a significant decline in occupancy in 2009 due to the major tenant bankruptcies, the shopping center portfolio occupancy was at 88.1% at March 31, 2011. Notwithstanding the decline in occupancy compared to historic levels, the Company continues to sign new leases at rental rates that are returning to historic averages. The total portfolio average annualized base rent per occupied square foot was $13.37 at March 31, 2011 as compared to $13.04 at March 31, 2010. Moreover, the Company has been able to achieve these results without significant capital investment in tenant improvements or leasing commissions. The weighted average cost of tenant improvements and lease commissions estimated to be incurred for leases executed during the first quarter of 2011 for the U.S. portfolio was only $2.44. The Company is very conscious of, and sensitive to, the risks posed to the economy, but is currently comfortable that the position of its portfolio and the general diversity and credit quality of its tenant base should enable it to successfully navigate through these challenging economic times.

Legal Matters

     The Company is a party to various joint ventures with the Coventry II Fund through which 11 existing or proposed retail properties, along with a portfolio of former Service Merchandise locations, were acquired at various times from 2003 through 2006. The properties were acquired by the joint ventures as value-add investments, with major renovation and/or ground-up development contemplated for many of the properties. The Company is generally responsible for day-to-day management of the properties. On November 4, 2009, Coventry Real Estate Advisors L.L.C., Coventry Real Estate Fund II, L.L.C. and Coventry Fund II Parallel Fund, L.L.C. (“Coventry”) filed suit against the Company and certain of its affiliates and officers in the Supreme Court of the State of New York, County of New York. The complaint alleges that the Company: (i) breached contractual obligations under a co-investment agreement and various joint venture limited liability company agreements, project development agreements and management and leasing agreements; (ii) breached its fiduciary duties as a member of various limited liability companies; (iii) fraudulently induced the plaintiffs to enter into certain agreements; and (iv) made certain material misrepresentations. The complaint also requests that a general release made by Coventry in favor of the Company in connection with one of the joint venture properties be voided on the grounds of economic duress. The complaint seeks compensatory and consequential damages in an amount not less than $500 million, as

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well as punitive damages. In response, the Company filed a motion to dismiss the complaint or, in the alternative, to sever the plaintiffs’ claims. In June 2010, the court granted in part (regarding Coventry’s claim that the Company breached a fiduciary duty owed to Coventry) and denied in part (all other claims) the Company’s motion. Coventry has filed a notice of appeal regarding that portion of the motion granted by the court. The Company filed an answer to the complaint, and has asserted various counterclaims against Coventry.

     The Company believes that the allegations in the lawsuit are without merit and that it has strong defenses against this lawsuit. The Company will vigorously defend itself against the allegations contained in the complaint. This lawsuit is subject to the uncertainties inherent in the litigation process and, therefore, no assurance can be given as to its ultimate outcome and no loss provision has been recorded in the accompanying financial statements because a loss contingency is not deemed probable or estimable. However, based on the information presently available to the Company, the Company does not expect that the ultimate resolution of this lawsuit will have a material adverse effect on the Company’s financial condition, results of operations or cash flows.

     On November 18, 2009, the Company filed a complaint against Coventry in the Court of Common Pleas, Cuyahoga County, Ohio, seeking, among other things, a temporary restraining order enjoining Coventry from terminating “for cause” the management agreements between the Company and the various joint ventures because the Company believes that the requisite conduct in a “for-cause” termination (i.e., fraud or willful misconduct committed by an executive of the Company at the level of at least senior vice president) did not occur. The court heard testimony in support of the Company’s motion (and Coventry’s opposition) and on December 4, 2009, issued a ruling in the Company’s favor. Specifically, the court issued a temporary restraining order enjoining Coventry from terminating the Company as property manager “for cause.” The court found that the Company was likely to succeed on the merits, that immediate and irreparable injury, loss or damage would result to the Company in the absence of such restraint, and that the balance of equities favored injunctive relief in the Company’s favor. The Company has filed a motion for summary judgment seeking a ruling by the Court that there was no basis for Coventry’s “for cause” termination as a matter of law. The Court has not yet ruled on the Company’s motion for summary judgment. A trial on the Company’s request for a permanent injunction has not yet been scheduled. The temporary restraining order will remain in effect until the trial. Due to the inherent uncertainties of the litigation process, no assurance can be given as to the ultimate outcome of this action.

     In addition to the litigation discussed above, the Company and its subsidiaries are subject to various legal proceedings, which, taken together, are not expected to have a material adverse effect on the Company. The Company is also subject to a variety of legal actions for personal injury or property damage arising in the ordinary course of its business, most of which are covered by insurance. While the resolution of all matters cannot be predicted with certainty, management believes that the final outcome of such legal proceedings and claims will not have a material adverse effect on the Company’s liquidity, financial position or results of operations.

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Forward-Looking Statements

     Management’s discussion and analysis should be read in conjunction with the condensed consolidated financial statements and the notes thereto appearing elsewhere in this report. Historical results and percentage relationships set forth in the condensed consolidated financial statements, including trends that might appear, should not be taken as indicative of future operations. The Company 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 expectations for future periods. Forward-looking statements include, without limitation, statements related to acquisitions (including any related pro forma financial information) and other business development activities, future capital expenditures, financing sources and availability, and the effects of environmental and other regulations. Although the Company believes that the expectations reflected in these 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 statements of historical fact should be deemed to be forward-looking statements. Without limiting the foregoing, the words “believes,” “anticipates,” “plans,” “expects,” “seeks,” “estimates” and similar expressions are intended to identify forward-looking statements. Readers should exercise caution in interpreting and relying on forward-looking statements because they involve known and unknown risks, uncertainties and other factors that are, in some cases, beyond the Company’s control and that could cause actual results to differ materially from those expressed or implied in the forward-looking statements and that could materially affect the Company’s actual results, performance or achievements.

     Factors that could cause actual results, performance or achievements to differ materially from those expressed or implied by forward-looking statements include, but are not limited to, the following:

• The Company is subject to general risks affecting the real estate industry, including the need to enter into new leases or renew leases on favorable terms to generate rental revenues, and the economic downturn may adversely affect the ability of the Company’s tenants, or new tenants, to enter into new leases or the ability of the Company’s existing tenants to renew their leases at rates at least as favorable as their current rates;

• The Company could be adversely affected by changes in the local markets where its properties are located, as well as by adverse changes in national economic and market conditions;

• The Company may fail to anticipate the effects on its properties of changes in consumer buying practices, including catalog sales and sales over the Internet and the resulting retailing practices and space needs of its tenants, or a general downturn in its tenants’ businesses, which may cause tenants to close stores or default in payment of rent;

• The Company is subject to competition for tenants from other owners of retail properties, and its tenants are subject to competition from other retailers and methods of distribution. The Company is dependent upon the successful operations and financial condition of its tenants, in particular of its major tenants, and could be adversely affected by the bankruptcy of those tenants;

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• The Company relies on major tenants, which makes it vulnerable to changes in the business and financial condition of, or demand for its space by, such tenants;

• The Company may not realize the intended benefits of acquisition or merger transactions. The acquired assets may not perform as well as the Company anticipated, or the Company may not successfully integrate the assets and realize improvements in occupancy and operating results. The acquisition of certain assets may subject the Company to liabilities, including environmental liabilities;

• The Company may fail to identify, acquire, construct or develop additional properties that produce a desired yield on invested capital, or may fail to effectively integrate acquisitions of properties or portfolios of properties. In addition, the Company may be limited in its acquisition opportunities due to competition, the inability to obtain financing on reasonable terms or any financing at all, and other factors;

• The Company may fail to dispose of properties on favorable terms. In addition, real estate investments can be illiquid, particularly as prospective buyers may experience increased costs of financing or difficulties obtaining financing, and could limit the Company’s ability to promptly make changes to its portfolio to respond to economic and other conditions;

• The Company may abandon a development opportunity after expending resources if it determines that the development opportunity is not feasible due to a variety of factors, including a lack of availability of construction financing on reasonable terms, the impact of the economic environment on prospective tenants’ ability to enter into new leases or pay contractual rent, or the inability of the Company to obtain all necessary zoning and other required governmental permits and authorizations;

• The Company may not complete development projects on schedule as a result of various factors, many of which are beyond the Company’s control, such as weather, labor conditions, governmental approvals, material shortages or general economic downturn resulting in limited availability of capital, increased debt service expense and construction costs, and decreases in revenue;

• The Company’s financial condition may be affected by required debt service payments, the risk of default, and restrictions on its ability to incur additional debt or to enter into certain transactions under its credit facilities and other documents governing its debt obligations. In addition, the Company may encounter difficulties in obtaining permanent financing or refinancing existing debt. Borrowings under the Company’s revolving credit facilities are subject to certain representations and warranties and customary events of default, including any event that has had or could reasonably be expected to have a material adverse effect on the Company’s business or financial condition;

• Changes in interest rates could adversely affect the market price of the Company’s common shares, as well as its performance and cash flow;

• Debt and/or equity financing necessary for the Company to continue to grow and operate its business may not be available or may not be available on favorable terms;

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• Disruptions in the financial markets could affect the Company’s ability to obtain financing on reasonable terms and have other adverse effects on the Company and the market price of the Company’s common shares;

• The Company is subject to complex regulations related to its status as a REIT and would be adversely affected if it failed to qualify as a REIT;

• The Company must make distributions to shareholders to continue to qualify as a REIT, and if the Company must borrow funds to make distributions, those borrowings may not be available on favorable terms or at all;

• Joint venture investments may involve risks not otherwise present for investments made solely by the Company, including the possibility that a partner or co-venturer may become bankrupt, may at any time have different interests or goals than those of the Company and 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. In addition, a partner or co-venturer may not have access to sufficient capital to satisfy its funding obligations to the joint venture. The partner could cause a default under the joint venture loan for reasons outside of the Company’s control. Furthermore, the Company could be required to reduce the carrying value of its equity method investments if a loss in the carrying value of the investment is other than temporary;

• The outcome of pending or future litigation, including litigation with tenants or joint venture partners, may adversely affect the Company’s results of operations and financial condition;

• The Company may not realize anticipated returns from its real estate assets outside the United States. The Company may continue to pursue international opportunities that may subject the Company to different or greater risks than those associated with its domestic operations. The Company owns assets in Puerto Rico, an interest in an unconsolidated joint venture that owns properties in Brazil and an interest in consolidated joint ventures that were formed to develop and own properties in Canada and Russia;

• International development and ownership activities carry risks in addition to those the Company faces with the Company’s domestic properties and operations. These risks include the following:

• Adverse effects of changes in exchange rates for foreign currencies;

• Changes in foreign political or economic environments;

• Challenges of complying with a wide variety of foreign laws, including tax laws, and addressing different practices and customs relating to corporate governance, operations and litigation;

• Different lending practices;

• Cultural and consumer differences;

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• Changes in applicable laws and regulations in the United States that affect foreign operations;

• Difficulties in managing international operations; and

• Obstacles to the repatriation of earnings and cash.

• Although the Company’s international activities are currently a relatively small portion of its business, to the extent the Company expands its international activities, these risks could significantly increase and adversely affect its results of operations and financial condition;

• The Company is subject to potential environmental liabilities;

• The Company may incur losses that are uninsured or exceed policy coverage due to its liability for certain injuries to persons, property or the environment occurring on its properties;

• The Company could incur additional expenses to comply with or respond to claims under the Americans with Disabilities Act or otherwise be adversely affected by changes in government regulations, including changes in environmental, zoning, tax and other regulations and

• The Company may have to restate certain financial statements as a result of changes in, or the adoption of, new accounting rules and regulations to which the Company is subject, including accounting rules and regulations affecting the Company’s accounting policies.

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     The Company’s primary market risk exposure is interest rate risk. The Company’s debt, excluding unconsolidated joint venture debt, is summarized as follows:

	March 31, 2011										December 31, 2010
			Weighted- Average		Weighted- Average								Weighted- Average		Weighted- Average
	Amount (Millions)		Maturity (Years)		Interest Rate			Percentage of Total			Amount (Millions)		Maturity (Years)		Interest Rate			Percentage of Total
Fixed-Rate Debt(A)	$	3,680.2		4.5		5.7	%		86.2	%	$	3,428.1		4.3		5.8	%		79.7	%
Variable-Rate Debt(A)	$	589.8		2.0		1.5	%		13.8	%	$	873.9		1.7		2.3	%		20.3	%

(A) Adjusted to reflect the $185 million and $150 million of variable-rate debt that LIBOR was swapped to a fixed-rate of 3.9% and 3.4% at March 31, 2011 and December 31, 2010, respectively.

     The Company’s unconsolidated joint ventures’ fixed-rate indebtedness is summarized as follows:

	March 31, 2011									December 31, 2010
			Company’s									Company’s
	Joint Venture Debt		Proportionate Share		Weighted- Average		Weighted- Average			Joint Venture Debt		Proportionate Share		Weighted- Average		Weighted- Average
	(Millions)		(Millions)		Maturity (Years)		Interest Rate			(Millions)		(Millions)		Maturity (Years)		Interest Rate
Fixed-Rate Debt	$	3,237.1	$	671.7		3.7		5.5	%	$	3,289.3	$	707.3		4.1		5.6	%
Variable-Rate Debt	$	647.2	$	119.1		2.0		4.7	%	$	661.5	$	128.5		1.8		4.0	%

     The Company intends to utilize retained cash flow, proceeds from asset sales, financing and variable-rate indebtedness available under its Revolving Credit Facilities to repay indebtedness and fund capital expenditures of the Company’s shopping centers. Thus, to the extent the Company incurs additional variable-rate indebtedness, its exposure to increases in interest rates in an inflationary period would increase. The Company does not believe, however, that increases in interest expense as a result of inflation will significantly impact the Company’s distributable cash flow.

     The interest rate risk on a portion of the Company’s and its unconsolidated joint ventures’ variable-rate debt described above has been mitigated through the use of interest rate swap agreements (the “Swaps”) with major financial institutions. At March 31, 2011 and December 31, 2010, the interest rate on the Company’s $185 million and $150 million, respectively, consolidated floating rate debt, was swapped to fixed rates. The Company is exposed to credit risk in the event of nonperformance by the counterparties to the Swaps. The Company believes it mitigates its credit risk by entering into Swaps with major financial institutions.

     In February 2011, the Company entered into treasury locks with a notional amount of $200 million. The treasury locks were terminated in connection with the issuance of unsecured notes in March 2011. The treasury locks were executed to hedge the benchmark interest rate associated with forecasted interest payments associated with the anticipated issuance of fixed-rate borrowings. The effective portion of these hedging relationships has been deferred in accumulated other comprehensive income and will be reclassified into earnings over the term of the debt as an adjustment to earnings, based on the effective-yield method.

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     The carrying value of the Company’s fixed-rate debt is adjusted to include the $185 million and $150 million that were swapped to a fixed rate at March 31, 2011 and December 31, 2010, respectively. The fair value of the Company’s fixed-rate debt is adjusted to (i) include the swaps reflected in the carrying value, and (ii) include the Company’s proportionate share of the joint venture fixed-rate debt. An estimate of the effect of a 100-point increase at March 31, 2011 and December 31, 2010, is summarized as follows (in millions):

	March 31, 2011								December 31, 2010
						100 Basis Point									100 Basis Point
						Increase in Market									Increase in Market
	Carrying Value		Fair Value			Interest Rates				Carrying Value		Fair Value			Interest Rates
Company’s fixed-rate debt	$	3,680.2	$	3,939.9	(A)	$	3,864.0	(B)		$	3,428.1	$	3,647.2	(A)	$	3,527.0	(B)
Company’s proportionate share of joint venture fixed-rate debt	$	671.7	$	657.6		$	640.0			$	707.3	$	691.9		$	672.7

(A)	Includes the fair value of interest rate swaps, which was a liability of $4.6 million and $5.2 million at March 31, 2011 and December 31, 2010, respectively.
(B)	Includes the fair value of interest rate swaps, which was an asset of $1.2 million and a liability of $3.1 million at March 31, 2011 and December 31, 2010, respectively.

     The sensitivity to changes in interest rates of the Company’s fixed-rate debt was determined utilizing a valuation model based upon factors that measure the net present value of such obligations that arise from the hypothetical estimate as discussed above.

     Further, a 100 basis point increase in short-term market interest rates on variable-rate debt at March 31, 2011 would result in an increase in interest expense of approximately $1.5 million for the Company and $0.3 million representing the Company’s proportionate share of the joint ventures’ interest expense relating to variable-rate debt outstanding for the three-month period. The estimated increase in interest expense for the year does not give effect to possible changes in the daily balance for the Company’s or joint ventures’ outstanding variable-rate debt.

     The Company and its joint ventures intend to continually monitor and actively manage interest costs on their variable-rate debt portfolio and may enter into swap positions based on market fluctuations. In addition, the Company believes that it has the ability to obtain funds through additional equity and/or debt offerings and joint venture capital. Accordingly, the cost of obtaining such protection agreements in relation to the Company’s access to capital markets will continue to be evaluated. The Company has not entered, and does not plan to enter, into any derivative financial instruments for trading or speculative purposes. As of March 31, 2011, the Company had no other material exposure to market risk.

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ITEM 4. CONTROLS AND PROCEDURES

     Based on their evaluation as required by Securities Exchange Act Rules 13a-15(b) and 15d-15(b), the Company’s Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”) have concluded that the Company’s disclosure controls and procedures (as defined in Securities Exchange Act Rule 13a-15(e)) are effective as of the end of the period covered by this quarterly report on Form 10-Q to ensure that information required to be disclosed by the Company in reports that it files or submits under the Securities Exchange Act is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms and were effective as of the end of such period to ensure that information required to be disclosed by the Company issuer in reports that it files or submits under the Securities Exchange Act is accumulated and communicated to the Company’s management, including its CEO and CFO, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

     During the three-month period ended March 31, 2011, there were no changes in the Company’s internal control over financial reporting that materially affected or are reasonably likely to materially affect the Company’s internal control over financial reporting.

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PART II

OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

     Other than routine litigation and administrative proceedings arising in the ordinary course of business, the Company is not presently involved in any litigation nor, to its knowledge, is any litigation threatened against the Company or its properties that is reasonably likely to have a material adverse effect on the liquidity or results of operations of the Company.

     The Company is a party to various joint ventures with Coventry Real Estate Fund II, L.L.C. and Coventry Fund II Parallel Fund, L.L.C., which funds are advised and managed by Coventry Real Estate Advisors L.L.C. (collectively, the “Coventry II Fund”), through which 11 existing or proposed retail properties, along with a portfolio of former Service Merchandise locations, were acquired at various times from 2003 through 2006. The properties were acquired by the joint ventures as value-add investments, with major renovation and/or ground-up development contemplated for many of the properties. The Company is generally responsible for day-to-day management of the properties. On November 4, 2009, Coventry Real Estate Advisors L.L.C., Coventry Real Estate Fund II, L.L.C. and Coventry Fund II Parallel Fund, L.L.C. (collectively, “Coventry”) filed suit against the Company and certain of its affiliates and officers in the Supreme Court of the State of New York, County of New York. The complaint alleges that the Company: (i) breached contractual obligations under a co-investment agreement and various joint venture limited liability company agreements, project development agreements and management and leasing agreements; (ii) breached its fiduciary duties as a member of various limited liability companies; (iii) fraudulently induced the plaintiffs to enter into certain agreements; and (iv) made certain material misrepresentations. The complaint also requests that a general release made by Coventry in favor of the Company in connection with one of the joint venture properties be voided on the grounds of economic duress. The complaint seeks compensatory and consequential damages in an amount not less than $500 million, as well as punitive damages. In response, the Company filed a motion to dismiss the complaint or, in the alternative, to sever the plaintiffs’ claims. In June 2010, the court granted in part (regarding Coventry’s claim that the Company breached a fiduciary duty owed to Coventry) and denied in part (all other claims) the Company’s motion. Coventry has filed a notice of appeal regarding that portion of the motion granted by the court. The Company filed an answer to the complaint, and has asserted various counterclaims against Coventry.

     The Company believes that the allegations in the lawsuit are without merit and that it has strong defenses against this lawsuit. The Company will vigorously defend itself against the allegations contained in the complaint. This lawsuit is subject to the uncertainties inherent in the litigation process and, therefore, no assurance can be given as to its ultimate outcome. However, based on the information presently available to the Company, the Company does not expect that the ultimate resolution of this lawsuit will have a material adverse effect on the Company’s financial condition, results of operations or cash flows.

     On November 18, 2009, the Company filed a complaint against Coventry in the Court of Common Pleas, Cuyahoga County, Ohio, seeking, among other things, a temporary restraining order

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enjoining Coventry from terminating “for cause” the management agreements between the Company and the various joint ventures because the Company believes that the requisite conduct in a “for-cause” termination (i.e., fraud or willful misconduct committed by an executive of the Company at the level of at least senior vice president) did not occur. The court heard testimony in support of the Company’s motion (and Coventry’s opposition) and on December 4, 2009, issued a ruling in the Company’s favor. Specifically, the court issued a temporary restraining order enjoining Coventry from terminating the Company as property manager “for cause.” The court found that the Company was likely to succeed on the merits, that immediate and irreparable injury, loss or damage would result to the Company in the absence of such restraint, and that the balance of equities favored injunctive relief in the Company’s favor. The Company has filed a motion for summary judgment seeking a ruling by the Court that there was no basis for Coventry’s “for cause” termination as a matter of law. The Court has not yet ruled on the Company’s motion for summary judgment. A trial on the Company’s request for a permanent injunction has not yet been scheduled. The temporary restraining order will remain in effect until the trial. Due to the inherent uncertainties of the litigation process, no assurance can be given as to the ultimate outcome of this action.

ITEM 1A. RISK FACTORS

     None.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

ISSUER PURCHASES OF EQUITY SECURITIES

							(d) Maximum Number
							(or Approximate
					(c) Total Number of		Dollar Value) of
	(a) Total				Shares Purchased as		Shares that May Yet
	number of shares				Part of Publicly		Be Purchased Under
	purchased		(b) Average Price		Announced Plans or		the Plans or
	(1)		Paid per Share		Programs		Programs
January 1 — 31, 2011		67,991	$	13.68		—		—
February 1 — 28, 2011		30,373		13.83		—		—
March 1 — 31, 2011		33,285		13.43		—		—
Total		131,649	$	13.65		—		—

⁽¹⁾ Consists of common shares surrendered or deemed surrendered to the Company to satisfy statutory minimum tax withholding obligations in connection with the vesting and/or exercise of awards under the Company’s equity-based compensation plans.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

     None.

ITEM 4. [REMOVED AND RESERVED]

ITEM 5. OTHER INFORMATION

     None

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ITEM 6. EXHIBITS

4.1	Thirteenth Supplemental Indenture, dated as of Mach 13, 2011, by and between the Company and U.S. Bank National Association
31.1	Certification of principal financial officer pursuant to Rule 13a-14(a) of the Exchange Act of 1934
31.2	Certification of principal financial officer pursuant to Rule 13a-14(a) of the Exchange Act of 1934
32.1	Certification of CEO pursuant to Rule 13a-14(b) of the Exchange Act and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of this report pursuant to the Sarbanes-Oxley Act of 2002 1
32.2	Certification of CFO pursuant to Rule 13a-14(b) of the Exchange Act and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of this report pursuant to the Sarbanes-Oxley Act of 2002 1
101.INS	XBRL Instance Document.2
101.SCH	XBRL Taxonomy Extension Schema Document. 2
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document. 2
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document. 2
101.LAB	XBRL Taxonomy Extension Label Linkbase Document. 2
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document. 2

1	Pursuant to SEC Release No. 34-4751, these exhibits are deemed to accompany this report and are not “filed” as part of this report.
2	Submitted electronically herewith.

     Attached as Exhibit 101 to this report are the following formatted in XBRL (Extensible Business Reporting Language): (i) Condensed Consolidated Balance Sheets as of March 31, 2011 and December 31, 2010, (ii) Condensed Consolidated Statements of Operations for the Three-Month Periods Ended March 31, 2011 and 2010, (iii) Condensed Consolidated Statements of Cash Flows for the Three-Month Periods Ended March 31, 2011 and 2010, and (iv) Notes to Condensed Consolidated Financial Statements.

     In accordance with Rule 406T of Regulation S-T, the XBRL related information in Exhibit 101 to this Quarterly Report on Form 10-Q shall not be deemed to be “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liability of that section, and shall not be part of any registration or other document filed under the Securities Act or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.

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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 thereunto duly authorized.

DEVELOPERS DIVERSIFIED REALTY CORPORATION

(Date) May 9, 2011	/s/ Christa A. Vesy
	Christa A. Vesy, Senior Vice President and Chief Accounting Officer (Authorized Officer)

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EXHIBIT INDEX

Exhibit No.				Filed Herewith or
Under Reg. S-K Item	Form 10-Q			Incorporated Herein
601	Exhibit No.		Description	by Reference
4.1		4.1	Thirteenth Supplemental Indenture, dated as of March 13, 2011, by and between the Company and U.S. Bank National Association	Filed herewith
31		31.1	Certification of principal executive officer pursuant to Rule 13a-14(a) of the Exchange Act of 1934	Filed herewith
31		31.2	Certification of principal financial officer pursuant to Rule 13a-14(a) of the Exchange Act of 1934	Filed herewith
32		32.1	Certification of CEO pursuant to Rule 13a-14(b) of the Exchange Act and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of this report pursuant to the Sarbanes-Oxley Act of 2002 1	Filed herewith
32		32.2	Certification of CFO pursuant to Rule 13a-14(b) of the Exchange Act and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of this report pursuant to the Sarbanes-Oxley Act of 2002 1	Filed herewith
101	101.INS		XBRL Instance Document	Submitted electronically herewith
101	101.SCH		XBRL Taxonomy Extension Schema Document	Submitted electronically herewith
101	101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document	Submitted electronically herewith
101	101.DEF		XBRL Taxonomy Extension Definition Linkbase Document	Submitted electronically herewith
101	101.LAB		XBRL Taxonomy Extension Label Linkbase Document	Submitted electronically herewith
101	101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document	Submitted electronically herewith

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EX-4.1

Exhibit 4.1

THIRTEENTH SUPPLEMENTAL INDENTURE

          THIS THIRTEENTH SUPPLEMENTAL INDENTURE is entered into as of March 7, 2011, by and between Developers Diversified Realty Corporation, an Ohio corporation (the “Company”), and U.S. Bank National Association (the “Trustee”), a national banking association organized and existing under the laws of the United States, as successor trustee to U.S. Bank Trust National Association, as successor to National City Bank.

          WHEREAS, the Company and the Trustee entered into the Indenture dated as of May 1, 1994 (as supplemented by a First Supplemental Indenture dated as of May 10, 1995, by a Second Supplemental Indenture dated as of July 18, 2003, by a Third Supplemental Indenture dated as of January 23, 2004, by a Fourth Supplemental Indenture dated as of April 22, 2004, by a Fifth Supplemental Indenture dated as of April 28, 2005, by a Sixth Supplemental Indenture dated as of October 7, 2005, by a Seventh Supplemental Indenture dated as of August 28, 2006, by an Eighth Supplemental Indenture dated as of March 13, 2007, by a Ninth Supplemental Indenture dated as of September 30, 2009, by a Tenth Supplemental Indenture dated as of March 19, 2010, by an Eleventh Supplemental Indenture dated as of August 12, 2010 and by a Twelfth Supplemental Indenture dated as of November 5, 2010, the “Indenture”), relating to the Company’s senior debt securities;

          WHEREAS, the Company has made a request to the Trustee that the Trustee join with it, in accordance with Section 901 of the Indenture, in the execution of this Thirteenth Supplemental Indenture to include the Company’s $300,000,000 principal amount of 4.75% Notes Due 2018 (the “Notes”) in the definition of Designated Securities such that the covenant in Section 1015 of the Indenture will inure to their benefit;

          WHEREAS, the Company desires to establish the form and terms of the Notes;

          WHEREAS, the Company and the Trustee are authorized to enter into this Thirteenth Supplemental Indenture; and

          NOW, THEREFORE, the Company and the Trustee agree as follows:

          Section 1. Relation to Indenture. This Thirteenth Supplemental Indenture supplements the Indenture and shall be a part and subject to all the terms thereof. Except as supplemented hereby, the Indenture and the Securities issued thereunder shall continue in full force and effect.

          Section 2. Capitalized Terms. Capitalized terms used herein and not otherwise defined herein are used as defined in the Indenture.

          Section 3. Definitions.

          The definition of “Consolidated Income Available for Debt Service” is hereby amended in its entirety as follows:

“Consolidated Income Available for Debt Service” for any period means Consolidated Net Income of the Company and its Subsidiaries (a) plus amounts which have been deducted for (i) interest on Debt of the Company and its Subsidiaries, (ii) provision for taxes of the Company and its Subsidiaries based on income, (iii) amortization of debt discount, and (iv) depreciation and amortization, and (b) excluding (i) any extraordinary, non-recurring and other unusual noncash charge, (ii) any gains and losses on sale of real estate, and (iii) the equity in net income or loss of joint ventures in which the Company or its Subsidiaries owns an interest to the extent not providing a source of, or requiring a use of, cash, respectively.

          The amendment of the definition of “Consolidated Income Available for Debt Service” relates solely to the rights of the Holders of the Notes and shall not affect the rights under the Indenture of the Holders of Securities of any other series.

          The definition of “Designated Securities” is hereby amended in its entirety as follows:

“Designated Securities” means the Company’s $300,000,000 principal amount of 4.625% Notes Due 2010, the Company’s $275,000,000 principal amount of 3.875% Notes Due 2009, the Company’s $250,000,000 principal amount of 5.25% Notes Due 2011, the Company’s $200,000,000 principal amount of 5.0% Notes Due 2010, the Company’s $200,000,000 principal amount of 5.5% Notes Due 2015, the Company’s $350,000,000 principal amount of 5.375% Notes Due 2012, the Company’s $300,000,000 principal amount of 9.625% Notes Due 2016, the Company’s $300,000,000 principal amount of 7.50% Notes Due 2017, the Company’s $300,000,000 principal amount of 7.875% Notes Due 2020 and the Company’s $300,000,000 principal amount of 4.75% Notes due 2018.

          The definition of “Maximum Annual Service Charge” is hereby amended in its entirety as follows:

“Maximum Annual Service Charge” as of any date means the maximum amount payable during the Company’s four consecutive fiscal quarters most recently ended before such date for interest on, and required amortization of, Debt (including, in the case of the additional Debt being incurred, the pro forma effect of the Debt and intended application of the proceeds thereof as if such Debt had been outstanding for such four-quarter period). The amount payable for amortization shall include the amount of any sinking fund or other analogous fund for the retirement of Debt and the amount payable on account of principal of any such Debt that matures serially other than at the final maturity date of such Debt.

2

          The amendment of the definition of “Maximum Annual Service Charge” relates solely to the rights of the Holders of the Notes and shall not affect the rights under the Indenture of the Holders of Securities of any other series.

          The definition of “Total Assets” is hereby amended in its entirety as follows:

“Total Assets” as of any date means the sum of (i) Undepreciated Real Estate Assets and (ii) all other assets of the Company and its Subsidiaries determined on a consolidated basis in accordance with GAAP (but excluding goodwill and unamortized debt costs) after eliminating intercompany accounts and transactions.

          The amendment of the definition of “Total Assets” relates solely to the rights of the Holders of the Notes and shall not affect the rights under the Indenture of the Holders of Securities of any other series.

          The definition of “Unencumbered Real Estate Asset Value” is hereby amended in its entirety as follows:

“Unencumbered Real Estate Asset Value” as of any date means the sum of: (a) the Undepreciated Real Estate Assets, which are not encumbered by any mortgage, lien, charge, pledge or security interest, as of the end of the Company’s latest fiscal quarter covered in the Company’s Annual Report on Form 10-K or Quarterly Report on Form 10-Q, as the case may be, most recently filed with the Commission (or, if that filing is not required under the Securities Exchange Act of 1934, as amended, with the Trustee) prior to such date; provided, however, that all investments in unconsolidated limited partnerships, unconsolidated limited liability companies and other unconsolidated entities shall be excluded from Unencumbered Real Estate Asset Value; and (b) the purchase price of any real estate assets that are not encumbered by any mortgage, lien, charge, pledge, or security interest and were acquired by the Company or any Subsidiary after the end of such quarter; provided however, that all investments in unconsolidated limited partnerships, unconsolidated limited liability companies and other unconsolidated entities shall be excluded from Unencumbered Real Estate Asset Value.

          The amendment of the definition of “Unencumbered Real Estate Asset Value” relates solely to the rights of the Holders of the Notes and shall not affect the rights under the Indenture of the Holders of Securities of any other series.

          Section 4. Form and Terms of the Notes.

          The Notes and the Trustee’s certificate of authentication shall be substantially in the form of Exhibit A attached hereto. The aggregate principal amount of the Notes that may be authenticated and delivered under the Indenture, as amended hereby, shall be $300,000,000. The Company may, without the consent of the Holders,

3

create and issue additional securities ranking pari passu with the Notes in all respects and so that such additional Notes shall be consolidated and form a single series having the same terms as to status, redemption or otherwise as the Notes initially issued.

          The terms of the Notes are established as set forth in Exhibit A attached hereto and this Thirteenth Supplemental Indenture. The terms and notations contained in the Notes shall constitute, and are hereby expressly made, a part of the Indenture as supplemented by this Thirteenth Supplemental Indenture, and the Company and the Trustee, by their execution and delivery of this Thirteenth Supplemental Indenture, expressly agree to such terms and provisions and to be bound thereby.

          Clause five of Section 501 of the Indenture is hereby amended in its entirety as follows:

     “If any event of default under any bond, debenture, note or other evidence of indebtedness of the Company (including any event of default with respect to any other series of Securities), or under any mortgage, indenture or other instrument of the Company under which there may be issued or by which there may be secured or evidenced any indebtedness of the Company (or by any Subsidiary, the repayment of which the Company has guaranteed or for which the Company is directly responsible or liable as obligor or guarantor), whether such indebtedness now exists or shall hereafter be created, shall happen and shall result in an aggregate principal amount exceeding $25,000,000 becoming or being declared due and payable prior to the date on which it would otherwise have become due and payable, without such indebtedness having been discharged, or such acceleration having been waived, rescinded or annulled, within a period of 10 days after there shall have been given, by registered or certified mail, to the Company by the Trustee or to the Company and the Trustee by the Holders of at least 10% in principal amount of the Notes a written notice specifying such event of default and requiring the Company to cause such indebtedness to be discharged or cause such acceleration to be rescinded or annulled and stating that such notice is a “Notice of Default” hereunder. Subject to the provisions of Section 601, the Trustee shall not be deemed to have knowledge of such event of default unless either (A) a Responsible Officer of the Trustee shall have actual knowledge of such event of default or (B) the Trustee shall have received written notice thereof from the Company, from any Holder, from the holder of any such indebtedness or from the trustee under any such mortgage, indenture or other instrument; or”.

          The amendment to clause five of Section 501 of the Indenture relates solely to the rights of the Holders of the Notes and shall not affect the rights under the Indenture of the Holders of Securities of any other series.

          Section 1004 of the Indenture is hereby amended in its entirety as follows:

“Section 1004. Limitations on Incurrence of Debt. (a) The Company will not, and will not permit any Subsidiary to, incur any Debt if, immediately after giving effect to the incurrence of such additional Debt, the aggregate principal amount of all outstanding Debt of the Company

4

and its Subsidiaries on a consolidated basis determined in accordance with GAAP is greater than 65% of the sum of (i) the Undepreciated Real Estate Assets as of the end of the Company’s fiscal quarter covered in the Company’s Annual Report on Form 10-K or Quarterly Report on Form 10-Q, as the case may be, most recently filed with the Commission (or, if such filing is not permitted under the Securities Exchange Act of 1934, with the Trustee) prior to the incurrence of such additional Debt and (ii) the increase, if any, in the Undepreciated Real Estate Assets from the end of such quarter, including, without limitation, any increase in the Undepreciated Real Estate Assets caused by the application of the proceeds of additional Debt.

(b) In addition to the limitation set forth in subsection (a) of this Section 1004, the Company will not, and will not permit any Subsidiary to, incur any Debt if Consolidated Income Available for Debt Service for the Company’s four consecutive fiscal quarters most recently ended before the date on which such additional Debt is to be incurred shall have been less than 1.5 times the Maximum Annual Service Charge on the Debt of the Company and all Subsidiaries on a consolidated basis determined in accordance with GAAP to be outstanding immediately after the incurrence of such additional Debt.

(c) For purposes of this Section 1004, Debt shall be deemed to be “incurred” by the Company or a Subsidiary whenever the Company or such Subsidiary shall create, assume, guarantee or otherwise become liable in respect thereof.”

          The amendment of Section 1004 of the Indenture relates solely to the rights of the Holders of the Notes and shall not affect the rights under the Indenture of the Holders of Securities of any other series.

          Section 1005 of the Indenture is hereby amended in its entirety as follows:

          “Section 1005. Restrictions on Dividends and Other Distributions.

The Company will not, in respect of any shares of any class of its capital stock, (a) declare or pay any dividends (other than dividends payable in capital stock of the Company) thereon, (b) apply any of its property or assets to the purchase, redemption or other acquisition or retirement thereof, (c) set apart any sum for the purchase, redemption or other acquisition or retirement thereof, or (d) make any other distribution thereon, by reduction of capital or otherwise if, immediately after such declaration or other action referred to above, the aggregate of all such declarations and other actions since the date on which this Indenture was originally executed shall exceed the sum of (i) Funds from Operations from December 31, 1993 until the end of the Company’s latest fiscal

5

quarter covered in the Company’s Annual Report on Form 10-K or Quarterly Report on Form 10-Q, as the case may be, most recently filed with the Commission (or, if such filing is not permitted under the Securities Exchange Act of 1934, with the Trustee) prior to such declaration or other action and (ii) $20,000,000; PROVIDED, HOWEVER, that the foregoing limitation shall not apply to any declaration or other action referred to above which is necessary to maintain the Company’s status as a “real estate investment trust” under the Internal Revenue Code of 1986, as amended, if the aggregate principal amount of all outstanding Debt of the Company and its Subsidiaries on a consolidated basis determined in accordance with GAAP at such time is less than 65% of the Undepreciated Real Estate Assets as of the end of the Company’s latest fiscal quarter covered in the Company’s Annual Report on Form 10-K or Quarterly Report on Form 10-Q, as the case may be, most recently filed with the Commission (or, if such filing is not permitted under the Securities Exchange Act of 1934, with the Trustee) prior to such declaration or other action.

Notwithstanding the foregoing, the provisions of this Section 1005 will not prohibit the payment of any dividend within 30 days of the declaration thereof if at such date of declaration such payment would have complied with the provisions hereof.”

          The amendment of Section 1005 of the Indenture relates solely to the rights of the Holders of the Notes and shall not affect the rights under the Indenture of the Holders of Securities of any other series.

          Section 1015 of the Indenture is hereby amended in its entirety as follows:

“Section 1015. Limitations on Incurrence of Secured Debt. So long as any of the Designated Securities remain outstanding, the Company will not, and will not permit any Subsidiary to, incur any Secured Debt, if immediately after giving effect to the incurrence of such Secured Debt and the application of the proceeds from such Secured Debt, the aggregate amount of all of the Company’s and its Subsidiaries’ outstanding Secured Debt on a consolidated basis is greater than 40% of the sum of (i) the Total Assets as of the end of the Company’s fiscal quarter covered in the Company’s Annual Report on Form 10-K or Quarterly Report on Form 10-Q, as the case may be, most recently filed with the Commission (or, if such filing is not permitted under the Securities Exchange Act of 1934, with the Trustee) prior to the incurrence of such additional Secured Debt and (ii) the increase, if any, in Total Assets from the end of such quarter including, without limitation, any increase in Total Assets caused by the application of the proceeds of additional Debt.”

6

          The amendment of Section 1015 of the Indenture relates solely to the rights of the Holders of the Notes and shall not affect the rights under the Indenture of the Holders of Securities of any other series.

          Section 5. Counterparts. This Thirteenth Supplemental Indenture may be executed in counterparts, each of which shall be deemed an original, but all of which shall together constitute one and the same instrument.

          Section 6. Governing Law. THIS THIRTEENTH SUPPLEMENTAL INDENTURE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF OHIO (WITHOUT GIVING EFFECT TO THE CONFLICT OF LAWS PRINCIPLES THEREOF).

          Section 7. Concerning the Trustee. The Trustee shall not be responsible for any recital herein (other than the fourth recital as it appears as it applies to the Trustee) as such recitals shall be taken as statements of the Company, or the validity of the execution by the Company of this Thirteenth Supplemental Indenture. The Trustee makes no representations as to the validity or sufficiency of this Thirteenth Supplemental Indenture.

7

          IN WITNESS WHEREOF, the parties hereto have caused this Thirteenth Supplemental Indenture to be duly executed, and their respective corporate seals to be hereunto affixed and attested, all as of the day and year first above written.

Attest:	DEVELOPERS DIVERSIFIED REALTY
	CORPORATION
/s/ David E. Weiss	By:	/s/ David J. Oakes
Name: David E. Weiss		Name: David J. Oakes
Title: Executive Vice President,		Title: Senior Executive Vice President and
General Counsel and Secretary		Chief Financial Officer
Attest:	U.S. BANK NATIONAL ASSOCIATION,
	as Trustee
/s/ Millie Rolla	By:	/s/ K. Wendy Kumar
Name: Millie Rolla		Name: K. Wendy Kumar
Title: Vice President		Title: Vice President

8

STATE OF OHIO	)
	)	SS:
COUNTY OF CUYAHOGA	)

          On the ____ day of March 2011, before me personally came David J. Oakes, to me known, who, being by me duly sworn, did depose and say that he resides at _________, Ohio, that he is the Senior Executive Vice President and Chief Financial Officer of DEVELOPERS DIVERSIFIED REALTY CORPORATION, one of the corporations described in and which executed the foregoing instrument and that he signed his name thereto by authority of the Board of Directors of said corporation.

[Notarial Seal]

Notary Public

COMMISSION EXPIRES

9

STATE OF NEW YORK	)
	)	SS:
COUNTY OF QUEENS	)

          On the ____ day of March 2011, before me personally came, K. Wendy Kumar, to me known, who, being by me duly sworn, did depose and say that she resides at Princeton, New Jersey, that she is the Vice President of U.S. BANK NATIONAL ASSOCIATION, one of the corporations described in and which executed the foregoing instrument and that she signed her name thereto by authority of the Board of Directors of said corporation.

[Notarial Seal]

Notary Public

COMMISSION EXPIRES

10

EXHIBIT A

REGISTERED	REGISTERED
NO. 001	PRINCIPAL AMOUNT
CUSIP NO. 251591 AY9	$300,000,000

[FACE OF NOTE]

DEVELOPERS DIVERSIFIED REALTY CORPORATION

4.75% Notes Due 2018

          UNLESS THIS GLOBAL NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (“DTC”), TO DEVELOPERS DIVERSIFIED REALTY CORPORATION (THE “COMPANY”) OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT AND ANY NOTE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC AND ANY PAYMENT IS MADE TO CEDE & CO., OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC, ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

          UNLESS AND UNTIL THIS NOTE IS EXCHANGED IN WHOLE OR IN PART FOR NOTES IN CERTIFICATED FORM, THIS NOTE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY DTC TO A NOMINEE THEREOF OR BY A NOMINEE THEREOF TO DTC OR ANOTHER NOMINEE OF DTC OR BY DTC OR ANY SUCH NOMINEE TO A SUCCESSOR OF DTC OR A NOMINEE OF SUCH SUCCESSOR.

          DEVELOPERS DIVERSIFIED REALTY CORPORATION, an Ohio corporation (herein referred to as the “Company,” which term includes any successor corporation under the Indenture referred to on the reverse hereof), for value received, hereby promises to pay to CEDE & CO., c/o The Depository Trust Company, 55 Water Street, New York, New York 10041, or registered assigns, the principal sum of THREE HUNDRED MILLION Dollars ($300,000,000) on April 15, 2018 (the “Stated Maturity Date”), unless redeemed prior to such date in accordance with the provisions referred to on the reverse hereof (the Stated Maturity Date or date of earlier redemption, as the case may be, is referred to herein as the “Maturity Date” with respect to the principal payable on such date), and to pay interest on the outstanding principal amount hereof from March 7, 2011 or from the most recent Interest Payment Date (as defined below) to which interest has been paid or duly provided for, on April 15 and October 15, of each year, commencing October 15, 2011 (each, an “Interest Payment Date”), and on the Maturity Date, at a rate of 4.75% per annum, computed on the basis of a 360-day year consisting of twelve 30-day months, until the principal hereof is paid or duly provided for.

A-1

          The interest so payable, and punctually paid or duly provided for, on any Interest Payment Date and on the Maturity Date will, as provided in the Indenture, be paid to the Holder in whose name this Note (or one or more predecessor Notes) is registered at the close of business on the Regular Record Date for such interest, which shall be fifteen calendar days (whether or not a Business Day, as defined below) next preceding such Interest Payment Date or the Maturity Date, as the case may be (each, a “Regular Record Date”). Any such interest not so punctually paid or duly provided for shall forthwith cease to be payable to the Holder on such Regular Record Date, and may be paid to the Holder in whose name this Note (or one or more Predecessor Notes) is registered at the close of business on a Special Record Date for the payment of such Defaulted Interest to be fixed by the Trustee referred to on the reverse hereof, notice whereof shall be given to Holders of Notes of this series not less than 10 days prior to such Special Record Date, or may be paid at any time in any other lawful manner not inconsistent with the requirements of any securities exchange on which the Notes of this series may be listed, and upon such notice as may be required by such exchange, all as more fully provided in the Indenture.

          The principal of this Note payable on the Maturity Date will be paid against presentation and surrender of this Note at either of the offices or agencies of the Company maintained for that purpose in the Borough of Manhattan, The City of New York and Cleveland, Ohio. The Company hereby appoints U.S. Bank National Association as Paying Agent for the Notes where Notes of the series may be presented and surrendered for payment and where notices, designations or requests in respect of payments with respect to the Notes may be served.

          Interest payable on this Note on any Interest Payment Date and on the Maturity Date, as the case may be, will include interest accrued from and including the next preceding Interest Payment Date in respect of which interest has been paid or duly provided for (or from and including March 7, 2011, if no interest has been paid on this Note) to but excluding such Interest Payment Date or the Maturity Date, as the case may be. If any Interest Payment Date or the Maturity Date falls on a day that is not a Business Day, principal, premium, if any, and/or interest payable with respect to such Interest Payment Date or Maturity Date, as the case may be, will be paid on the next succeeding Business Day with the same force and effect as if it were paid on the date such payment was due, and no interest shall accrue on the amount so payable for the period from and after such Interest Payment Date or Maturity Date, as the case may be. “Business Day” means any day, other than a Saturday or Sunday, that is neither a legal holiday nor a day on which banking institutions in New York City, New York, are authorized or required by law, regulation or executive order to close.

          All payments of principal, premium, if any, and interest by the Company in respect of this Note will be made by wire transfer of immediately available funds.

          Reference is hereby made to the further provisions of this Note set forth on the reverse hereof, which further provisions shall for all purposes have the same effect as if set forth at this place.

          Unless the Certificate of Authentication hereon has been executed by the Trustee by manual signature of one of its authorized signatories, this Note shall not be entitled to any benefit under the Indenture, or be valid or obligatory for any purpose.

A-2

          IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed.

Date: March 7, 2011

DEVELOPERS DIVERSIFIED REALTY CORPORATION
By:
	Name: David J. Oakes
	Title: Senior Executive Vice President and Chief Financial Officer

Attest:

Name: David E. Weiss

Title: Executive Vice President,

General Counsel and Secretary

TRUSTEE’S CERTIFICATE OF AUTHENTICATION

          This is one of the Securities of the series designated therein referred to in the within-mentioned Indenture.

          Dated: March 7, 2011

U.S. BANK NATIONAL ASSOCIATION, as Trustee
By:
	Authorized Officer

A-3

[REVERSE OF NOTE]

DEVELOPERS DIVERSIFIED REALTY CORPORATION

4.75% Notes Due 2018

          This Note is one of a duly authorized issue of securities of the Company (herein called the “Securities”), issued and to be issued in one or more series under an Indenture, dated as of May 1, 1994, as supplemented by the First Supplemental Indenture dated as of May 10, 1995, the Second Supplemental Indenture dated as of July 18, 2003, the Third Supplemental Indenture dated as of January 23, 2004, the Fourth Supplemental Indenture dated as of April 22, 2004, the Fifth Supplemental Indenture dated as of April 28, 2005, the Sixth Supplemental Indenture dated as of October 7, 2005, the Seventh Supplemental Indenture dated as of August 28, 2006, the Eighth Supplemental Indenture dated as of March 13, 2007, the Ninth Supplemental Indenture dated as of September 30, 2009, the Tenth Supplemental Indenture dated as of March 19, 2010, the Eleventh Supplemental Indenture dated as of August 12, 2010, the Twelfth Supplemental Indenture dated as of November 5, 2010 and the Thirteenth Supplemental Indenture dated as of March 7, 2011 (herein called the “Indenture”), between the Company and U.S. Bank National Association, as successor trustee to U.S. Bank Trust National Association, as successor to National City Bank (herein called the “Trustee,” which term includes any successor trustee under the Indenture with respect to the series of which this Note is a part), to which Indenture and all indentures supplemental thereto reference is hereby made for a statement of the respective rights, limitations of rights, duties and immunities thereunder of the Company, the Trustee and the Holders of the Securities, and of the terms upon which the Securities are, and are to be, authenticated and delivered. This Note is one of the duly authorized series of Securities designated as “4.75% Notes Due 2018” (collectively, the “Notes”), and the aggregate principal amount of the Notes to be issued under such series is limited to $300,000,000 (except for Notes authenticated and delivered upon transfer of, or in exchange for, or in lieu of other Notes). The Company may, without the consent of the Holders of any Securities, create and issue additional notes in the future having the same terms other than the date of original issuance, the issue price and the date on which interest begins to accrue so as to form a single series with the Notes. No additional notes may be issued if an Event of Default has occurred with respect to the Notes. The Notes are the unsecured and unsubordinated obligations of the Company and rank equally with all existing and future unsecured and unsubordinated indebtedness of the Company. All terms used but not defined in this Note shall have the meanings assigned to such terms in the Indenture.

          If an Event of Default shall occur and be continuing, the principal of the Securities of this series may be declared due and payable in the manner and with the effect provided in the Indenture.

          The Company may redeem the Notes at its option, at any time prior to the Maturity Date, in whole or from time to time in part, at a Redemption Price equal to the greater of (a) 100% of the principal amount of the Notes being redeemed and (b) the sum of the present values of the remaining scheduled payments of principal and interest through the Maturity Date on the Notes being redeemed (not including the portion of any payments of interest accrued to the Redemption Date) discounted to the Redemption Date on a semi-annual basis (assuming a

A-4

360-day year consisting of twelve 30-day months) at the Treasury Rate plus 30 basis points, plus, in each case, any interest accrued but not paid to the Redemption Date; provided however, that if the Company redeems the Notes 60 days or fewer prior to the Stated Maturity Date, the Redemption Price will equal 100% of the principal amount of the Notes being redeemed plus accrued and unpaid interest on the amount being redeemed to the Redemption Date. For the avoidance of doubt, any calculation of the remaining scheduled payments of principal and interest pursuant to the preceding sentence shall not include interest accrued as of the applicable Redemption Date.

          “Treasury Rate” means, with respect to any Redemption Date for the Notes, (i) the yield, under the heading which represents the average for the immediately preceding week, appearing in the most recently published statistical release designated “H.15(519)” or any successor publication which is published weekly by the Board of Governors of the Federal Reserve System and which established yields on actively traded United States Treasury securities adjusted to constant maturity under the caption “Treasury Constant Maturities,” for the maturity corresponding to the Comparable Treasury Issue (if no maturity is within three months before or after the Maturity Date, yields for the two published maturities most closely corresponding to the Comparable Treasury Issue shall be determined and the Treasury Rate shall be interpolated or extrapolated from such yields on a straight line basis, rounding to the nearest month) or (ii) if such release (or any successor release) is not published during the week preceding the calculation date or does not contain such yields, the rate per annum equal to the semi-annual equivalent yield to maturity of the Comparable Treasury Issue, calculated using a price for the Comparable Treasury Issue (expressed as a percentage of its principal amount) equal to the Comparable Treasury Price for such Redemption Date. The Treasury Rate shall be calculated by the Independent Investment Banker on the third Business Day preceding the Redemption Date.

          “Comparable Treasury Issue” means the United States Treasury security selected by the Independent Investment Banker as having a maturity comparable to the remaining term of the Notes to be redeemed that would be utilized, at the time of selection and in accordance with customary financial practice, in pricing new issues of corporate debt securities of comparable maturity to the remaining term of such Notes.

          “Independent Investment Banker” means one of the Reference Treasury Dealers that has been appointed by the Company.

          “Comparable Treasury Price” means with respect to any Redemption Date for the Notes (i) the average of the Reference Treasury Dealer Quotations for such Redemption Date, after excluding the highest and lowest of such Reference Treasury Dealer Quotations, or (ii) if the Trustee obtains fewer than five such Reference Treasury Dealer Quotations, the average of all such quotations.

          “Reference Treasury Dealer” means Merrill Lynch, Pierce, Fenner & Smith Incorporated, J.P. Morgan Securities LLC and RBC Capital Markets, LLC and their respective successors and two other nationally recognized investment banking firms that are primary U.S. Government securities dealers in The City of New York (each, a “Primary Treasury Dealer”) appointed by the Company, provided that prior written notice of the Company’s appointment of such other Primary Treasury Dealers shall be provided to the Trustee; provided, further, that if

A-5

any of the foregoing shall cease to be a Primary Treasury Dealer, the Company shall substitute in its place another Primary Treasury Dealer.

          “Reference Treasury Dealer Quotations” means, with respect to each Reference Treasury Dealer and any Redemption Date, the average, as determined by the Trustee, of the bid and asked prices for the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount) quoted in writing to the Trustee by such Reference Treasury Dealer at 5:00 p.m. on the third Business Day preceding such Redemption Date.

          Notice of any redemption will be mailed by first-class mail at least 30 days but not more than 60 days before the Redemption Date to each Holder of Notes to be redeemed. If the Company redeems less than all of the Notes, the Trustee will select the particular Notes to be redeemed pro rata by lot or by another method the Trustee deems fair and appropriate.

          This Note is not subject to any sinking fund.

          The Indenture contains provisions for defeasance of (i) the entire indebtedness of the Notes or (ii) certain covenants and Events of Default with respect to the Notes, in each case upon compliance with certain conditions set forth therein, which provisions apply to the Notes.

          The Indenture permits, with certain exceptions as therein provided, the amendment thereof and the modification of the rights and obligations of the Company and the rights of the Holders of the Securities under the Indenture at any time by the Company and the Trustee with the consent of the Holders of not less than a majority of the aggregate principal amount of all Securities issued under the Indenture at the time Outstanding and affected thereby. The Indenture also contains provisions permitting the Holders of not less than a majority of the aggregate principal amount of the Outstanding Securities, on behalf of the Holders of all such Securities, to waive compliance by the Company with certain provisions of the Indenture. Furthermore, provisions in the Indenture permit the Holders of not less than a majority of the aggregate principal amount of the Outstanding Securities of any series, in certain instances, to waive, on behalf of all of the Holders of Securities of such series, certain past defaults under the Indenture and their consequences. Any such consent or waiver by the Holder of this Note shall be conclusive and binding upon such Holder and upon all future Holders of this Note and other Notes issued upon the registration of transfer hereof or in exchange herefor or in lieu hereof, whether or not notation of such consent or waiver is made upon this Note.

          No reference herein to the Indenture and no provision of this Note or of the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of, premium, if any, and interest on this Note at the times, places and rate, and in the coin or currency, herein prescribed.

          As provided in the Indenture and subject to certain limitations therein and herein set forth, the transfer of this Note is registrable in the Security Register of the Company upon surrender of this Note for registration of transfer at the office or agency of the Company in any place where the principal of, premium, if any, and interest on this Note are payable, duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Company and the Security Registrar duly executed by, the Holder hereof or by his attorney duly

A-6

authorized in writing, and thereupon one or more new Notes, of authorized denominations and for the same aggregate principal amount, will be issued to the designated transferee or transferees.

          As provided in the Indenture and subject to certain limitations therein and herein set forth, this Note is exchangeable for a like aggregate principal amount of Notes of different authorized denominations but otherwise having the same terms and conditions, as requested by the Holder hereof surrendering the same.

          The Notes are issuable only in registered form without coupons in denominations of $1,000 and any integral multiple thereof.

          No service charge shall be made for any such registration of transfer or exchange, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith.

          Prior to due presentment of this Note for registration of transfer, the Company, the Trustee and any agent of the Company or the Trustee may treat the Person in whose name this Note is registered as the owner hereof for all purposes, whether or not this Note be overdue, and neither the Company, the Trustee nor any such agent shall be affected by notice to the contrary.

          The Indenture and the Notes shall be governed by and construed in accordance with the laws of the State of Ohio applicable to agreements made and to be performed entirely in such State.

A-7

EX-31.1

Exhibit 31.1

CERTIFICATIONS

I, Daniel B. Hurwitz, certify that:

1.	I have reviewed this Quarterly Report on Form 10-Q of Developers Diversified Realty Corporation;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

May 9, 2011

Date

/s/ Daniel B. Hurwitz  

Daniel B. Hurwitz 

President and Chief Executive Officer 

EX-31.2

Exhibit 31.2

CERTIFICATIONS

I, David J. Oakes, certify that:

1.	I have reviewed this Quarterly Report on Form 10-Q of Developers Diversified Realty Corporation;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

May 9, 2011

Date

/s/ David J. Oakes  

David J. Oakes 

Senior Executive Vice President and Chief Financial Officer 

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

     I, Daniel B. Hurwitz, President and Chief Executive Officer of Developers Diversified Realty Corporation (the “Company”), certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge:

(1) The Quarterly Report on Form 10-Q of the Company for the period ended March 31, 2011, as filed with the Securities and Exchange Commission (the “Report”), which this certification accompanies, fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of the dates and for the periods expressed in the Report.

/s/ Daniel B. Hurwitz  

Daniel B. Hurwitz 

President and Chief Executive Officer 

May 9, 2011 

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

     I, David J. Oakes, Senior Executive Vice President and Chief Financial Officer of Developers Diversified Realty Corporation (the “Company”), certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge:

(1) The Quarterly Report on Form 10-Q of the Company for the period ended March 31, 2011, as filed with the Securities and Exchange Commission (the “Report”), which this certification accompanies, fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of the dates and for the periods expressed in the Report.

/s/ David J. Oakes  

David J. Oakes 

Senior Executive Vice President and Chief Financial Officer 

May 9, 2011