UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

SCHEDULE 14A

(RULE 14a-101)

SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the Securities

Exchange Act of 1934 (Amendment No.      )

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Filed by a Party other than the Registrant o

Check the appropriate box:

o  Preliminary Proxy Statement

o  Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))

þ  Definitive Proxy Statement

o  Definitive Additional Materials

o  Soliciting Material Pursuant to Section 240.14a-12

DEVELOPERS DIVERSIFIED REALTY CORPORATION

(Name of Registrant as Specified In Its Charter)

(Name of Person(s) Filing Proxy Statement)

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DEVELOPERS DIVERSIFIED REALTY CORPORATION

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

       Notice is hereby given that the Annual Meeting of Shareholders of Developers Diversified Realty Corporation, an Ohio corporation (the “Company”), will be held at the Company’s corporate headquarters, 3300 Enterprise Parkway, Beachwood, Ohio 44122, on Tuesday, May 10, 2005, at 9:00 a.m., local time, for the following purposes:

      1. To fix the number of directors at ten;

      2. To elect ten directors, each to serve until the next annual meeting of shareholders and until a successor has been duly elected and qualified;

      3. To ratify the selection of PricewaterhouseCoopers LLP as the Company’s independent accountants for the Company’s fiscal year ending December 31, 2005; and

      4. To transact such other business as may properly come before the meeting.

      Only shareholders of record at the close of business on March 22, 2005 will be entitled to notice of and to vote at the meeting or any adjournment of the meeting. Shareholders are urged to complete, date and sign the enclosed proxy and return it in the enclosed envelope.

By order of the Board of Directors,

Joan U. Allgood

Secretary

Dated: April 4, 2005

YOUR VOTE IS IMPORTANT. PLEASE SIGN, DATE AND RETURN YOUR PROXY.

DEVELOPERS DIVERSIFIED REALTY CORPORATION

PROXY STATEMENT

Why did you send me this proxy statement?

      The Company sent you this proxy statement and the enclosed proxy card because the Company’s Board of Directors is soliciting your proxy to vote at the 2005 Annual Meeting of Shareholders. This proxy statement summarizes information you need to know to vote at the Annual Meeting. The Annual Meeting will be held at the Company’s corporate headquarters, 3300 Enterprise Parkway, Beachwood, Ohio 44122, on Tuesday, May 10, 2005, at 9:00 a.m., local time. However, you do not need to attend the Annual Meeting to vote your shares. Instead, you may simply complete, date, sign and return the enclosed proxy card.

      The Company will begin sending this proxy statement, the attached Notice of Annual Meeting of Shareholders and the enclosed proxy card on or about April 4, 2005 to all shareholders entitled to vote. Shareholders who owned the Company’s common shares at the close of business on March 22, 2005, the record date for the Annual Meeting, are entitled to vote. On that record date, there were 108,559,642 common shares outstanding. The Company is also sending its 2004 annual report to shareholders, which includes the Company’s financial statements, with this proxy statement.

Who is soliciting my proxy?

      This solicitation of proxies is made by and on behalf of the Company’s Board of Directors. The Company will bear the cost of the solicitation of proxies. In addition to the solicitation of proxies by mail, regular employees of the Company may solicit proxies by telephone or facsimile. Those employees will not receive any additional compensation for their participation in the solicitation. The Company has also retained Georgeson Shareholder Communications, Inc. at an estimated cost of $9,500 plus reimbursement of expenses, to assist in the solicitation of proxies from brokers, nominees, institutions and individuals.

How many votes do I have?

      Each of the Company’s common shares entitles you to one vote. The proxy card indicates the number of shares that you owned on the record date.

      If written notice is given by any shareholder to the President or the Secretary of the Company at least 48 hours before the Annual Meeting that the shareholder desires that cumulative voting be used for the election of directors, and if an announcement of the giving of that notice is made when the Annual Meeting is convened by the President or the Secretary or by or on behalf of the shareholder giving that notice, each shareholder will have the right to cumulate the voting power that the shareholder possesses in the election of directors. This means that each shareholder will be able to give one candidate a number of votes equal to the number of directors to be elected multiplied by the number of the shareholder’s shares, or to distribute the shareholder’s votes on the same principle among two or more candidates, as the shareholder sees fit.

      If voting for the election of directors is cumulative, the persons named in the enclosed proxy will vote the shares represented by proxies given to them in such manner so as to elect as many of the nominees named in this proxy statement as possible.

How do I vote by proxy?

      Whether or not you plan to attend the Annual Meeting, the Company urges you to complete, sign and date the enclosed proxy card and to return it in the envelope provided. Returning the proxy card will not affect your right to attend the Annual Meeting.

      If you properly complete your proxy card and send it to the Company in time to vote, your proxy (one of the individuals named in the proxy card) will vote your shares as you have directed. If you sign the proxy card but do

not make specific choices, your proxy will vote your shares as recommended by the Board of Directors to elect the director nominees listed in “Election of Directors” and in favor of Proposals One and Three.

      If any other matter is presented, your proxy will vote in accordance with his or her best judgment. As of the date of this proxy statement, the Company is not aware of other matters to be acted on at the Annual Meeting other than those matters described in this proxy statement.

May I revoke my proxy?

      If you give a proxy, you may revoke it at any time before it is exercised by giving written notice to the Company at its principal executive offices located at 3300 Enterprise Parkway, Beachwood, Ohio 44122, or by giving notice to the Company in open meeting. It is important to note that your presence at the Annual Meeting, without any further action on your part, will not revoke your previously granted proxy.

What constitutes a quorum?

      The presence at the Annual Meeting, either in person or by proxy, of the holders of a majority of the aggregate number of common shares outstanding on the record date will represent a quorum permitting the conduct of business at the meeting. Proxies received by the Company marked as abstentions or broker non-votes will be included in the calculation of the number of shares considered to be present at the meeting.

What vote is required to approve each proposal assuming that a quorum is present at the Annual Meeting?

Proposal One: To Fix the Number of Directors at Ten	The affirmative vote of a majority of the issued and outstanding common shares of the Company is required for approval of this proposal. If you abstain from voting or your shares are held in ‘street name‘ by a broker or nominee indicating on a proxy that it does not have authority to vote on Proposal One, it will have the same effect as a vote against Proposal One.
Proposal Two: Election of Directors	The ten nominees receiving the greatest number of votes ‘FOR‘ election will be elected as directors. If you do not vote for a particular nominee, or if you indicate ‘Withhold Authority‘ for a particular nominee on your proxy card, your vote will not count either for or against the nominee. If Proposal One is not approved, the current vacancy on the Board of Directors will remain. The vacant seat may be filled by the Board of Directors at its discretion.
Proposal Three: Ratification of the Selection of PricewaterhouseCoopers LLP as the Company’s Independent Accountants	Although the Company’s independent registered public accounting firm may be selected by the Audit Committee of the Board of Directors without shareholder approval, the Audit Committee will consider the affirmative vote of a majority of the votes cast by shareholders at the Annual Meeting to be a ratification by the shareholders of the selection of PricewaterhouseCoopers LLP as the Company’s independent registered public accounting firm. If you do not provide instructions to your broker, it will have the same effect as a vote against Proposal Three.

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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

      The following table sets forth certain information regarding the beneficial ownership of common shares of the Company as of February 23, 2005, except as otherwise disclosed in the notes below, by (a) the Company’s directors, (b) each other person who is known by the Company to own beneficially more than 5% of the outstanding common shares based on a review of filings with the Securities and Exchange Commission, (c) the Company’s Chief Executive Officer and the Company’s other executive officers named in the Summary Compensation Table and (d) the Company’s executive officers and directors as a group. Except as otherwise described in the notes below, the following beneficial owners have sole voting power and sole investment power with respect to all common shares set forth opposite their respective names.

		Number of
		Common Shares			Percentage
		Beneficially Owned			Ownership
Capital Research and Management Company			7,840,000	(1)		7.3%
	333 South Hope Street Los Angeles, California 90071
Franklin Resources, Inc.			5,405,400	(2)		5.3
	One Frankline Parkway San Mateo, California 94403
Scott A. Wolstein			1,888,194	(3)(4)		1.7
David M. Jacobstein			203,005	(4)(5)		*
Daniel B. Hurwitz			118,010	(4)(6)		*
Joan U. Allgood			139,878	(4)(7)		*
Timothy J. Bruce			78,554	(4)(8)		*
Dean S. Adler			18,193	(9)(10)		*
Terrance R. Ahern			17,193	(4)(10)(11)		*
Mohsen Anvari			0	(10)		*
Robert H. Gidel			15,193	(12)		*
Victor B. MacFarlane			8,723	(10)(13)		*
Craig Macnab			76,367	(10)(14)		*
Scott D. Roulston			1,536	(10)(15)		*
Barry A. Sholem			18,193	(16)		*
William B. Summers, Jr.			0			*
All Current Executive Officers and Directors as a Group (16 persons)			2,766,125	(17)		2.5%

*  Less than 1%

(1)	Information for common shares owned as of December 31, 2004 is based on a report on Schedule 13G filed with the Securities and Exchange Commission (the “SEC”) on February 11, 2005 by Capital Research and Management Company, an investment adviser registered under the Investment Advisers Act of 1940. According to the information provided in the report, Capital Research and Management Company has sole dispositive power over 7,840,000 common shares and sole voting power with respect to none of those common shares.
(2)	Information for common shares owned as of December 31, 2004 is based on a report on Schedule 13G filed with the SEC on February 14, 2005 by Franklin Resources, Inc., a parent holding company; Charles B. Johnson, a control person; Rupert H. Johnson, Jr., a control person and Franklin Advisors, Inc., an investment adviser. According to the information provided in the report, Franklin Advisors, Inc. has sole power to vote or direct the vote and sole power to dispose or direct the disposition of 5,405,400 common shares.
(3)	Includes 197,316 common shares subject to options currently exercisable or exercisable within 60 days. Does not include 714,728 common shares owned by Wolstein Business Enterprises, L.P., a family limited

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	partnership, because Mr. Wolstein does not have dispositive or voting control of the common shares owned by this entity.
(4)	Does not include 507,715 stock units credited to Mr. Wolstein’s account when he elected to defer the gain attributable to the exercise of stock options pursuant to the Company’s equity deferred compensation plans. Does not include 94,472; 16,061; 11,287; 907; 333 and 4,725 stock units credited to the accounts of Messrs. Wolstein, Jacobstein, Hurwitz, Bruce and Ahern and Mrs. Allgood, respectively, when such individual elected to defer the vesting of restricted common shares pursuant to the Company’s equity deferred compensation plans. The stock units represent the right to receive common shares at the end of the deferral period, but do not confer current dispositive or voting control of any common shares.
(5)	Includes 300 common shares held in a custodial account for the benefit of Mr. Jacobstein’s nephew; 400 common shares owned by Mr. Jacobstein’s son and 400 common shares owned by Mr. Jacobstein’s daughter, beneficial ownership of which is disclaimed by Mr. Jacobstein, and 117,614 common shares subject to options currently exercisable or exercisable within 60 days.
(6)	Includes 56,178 common shares subject to options currently exercisable or exercisable within 60 days.
(7)	Includes 1,675 common shares owned by Mrs. Allgood’s husband, beneficial ownership of which is disclaimed by Mrs. Allgood. Includes 19,406 common shares subject to options currently exercisable or exercisable within 60 days.
(8)	Includes 73,919 common shares subject to options currently exercisable or exercisable within 60 days.
(9)	Includes 16,000 common shares subject to options currently exercisable or exercisable within 60 days.

(10)	Does not include 9,739; 7,205; 3,015; 1,906; 677 and 677 units credited to the accounts of Messrs. Adler, Ahern, MacFarlane, Macnab and Roulston and Dr. Anvari pursuant to the Company’s directors’ deferred compensation plans. Each unit is the economic equivalent of one common share, but does not confer current dispositive or voting control of any common shares.
(11)	Includes 15,000 common shares subject to options currently exercisable or exercisable within 60 days.
(12)	Includes 3,000 common shares owned by a partnership in which Mr. Gidel and his wife each have a one-half interest.
(13)	Includes 6,666 common shares subject to options currently exercisable or exercisable within 60 days.
(14)	Mr. Macnab shares voting and dispositive power with his wife with respect to 70,144 of such common shares.
(15)	Includes 52 common shares held in a custodial account for the benefit of Mr. Roulston’s son and 307 common shares held in an individual retirement account.
(16)	Includes 16,000 common shares subject to options currently exercisable or exercisable within 60 days.
(17)	Includes 52,819 common shares subject to options currently exercisable or exercisable within 60 days owned by executive officers not named in the table, in addition to the information set forth in the footnotes above regarding each individual director’s and executive officer’s holdings.

PROPOSAL ONE: TO FIX THE NUMBER OF DIRECTORS AT TEN

      The Company’s Code of Regulations provides that the number of directors shall be fixed by the shareholders at no fewer than three and not more than 15. The number of directors has been fixed at eleven and there are currently ten directors on the Board of Directors. All ten of the current members of the Board of Directors are nominated for re-election, and the Board of Directors does not believe it is necessary at this time to add another member to the Board of Directors to fill the vacant seat. Accordingly, the Board of Directors believes that it is advisable to reduce the size of the Board of Directors to ten members. If Proposal One is not approved, the vacant seat could remain or the Board of Directors could fill the vacancy at its discretion.

      The affirmative vote of a majority of the issued and outstanding common shares is required for approval of this proposal.

      THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR THIS PROPOSAL.

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PROPOSAL TWO: ELECTION OF DIRECTORS

      If Proposal One is adopted, the number of directors will be fixed at ten. At the Annual Meeting, unless you specify otherwise, the common shares represented by your proxy will be voted to re-elect Messrs. Adler, Ahern, Gidel, MacFarlane, Macnab, Roulston, Sholem, Summers and Wolstein and Dr. Anvari. The ten nominees receiving the most votes will be elected as directors. If elected, each nominee will serve as a director until the next annual meeting of shareholders and until his successor is duly elected and qualified.

      If notice in writing is given by any shareholder to the President or the Secretary of the Company, not less than 48 hours before the time fixed for holding the Annual Meeting, that such shareholder desires that the voting for the election of directors will be cumulative, and if an announcement of the giving of such notice is made upon the convening of the Annual Meeting by the President or the Secretary or by or on behalf of the shareholder giving such notice, each shareholder will have the right to cumulate such voting power as such shareholder possesses at such election and to give one candidate an amount of votes equal to the number of directors to be elected multiplied by the number of such shareholder’s shares, or to distribute such shareholder’s votes on the same principle among two or more candidates, as such shareholder sees fit.

      If voting for the election of directors is cumulative, the persons named in the enclosed proxy will vote the common shares represented by proxies given to them in such manner so as to elect as many of the nominees as possible.

      If for any reason any of the nominees is not a candidate when the election occurs (which is not expected), the Board of Directors intends that proxies will be voted for the election of a substitute nominee designated by the Board of Directors as recommended by the Nominating and Corporate Governance Committee. The following information is furnished with respect to each person nominated for election as a director.

Nominees for Election at the Annual Meeting

		Period of
		Service as
Name and Age	Principal Occupation	Director
Dean S. Adler 48	Principal, Lubert-Adler Partners, L.P. (real estate investments)		5/97-Present
Terrance R. Ahern 49	Principal, The Townsend Group (institutional real estate consulting)		5/00-Present
Mohsen Anvari 55	Professor, Department of Banking and Finance at Case Western Reserve University’s Weatherhead School of Management		5/04-Present
Robert H. Gidel 53	Managing Partner, Liberty Partners, LP (real estate investments)		5/00-Present
Victor B. MacFarlane 53	Managing Principal, MacFarlane Partners (real estate investments)		5/02-Present
Craig Macnab 49	Chief Executive Officer, Commercial Net Lease Realty (real estate investment trust)		3/03-Present
Scott D. Roulston 47	President and Chief Executive Officer, Fairport Asset Management, LLC (investment advisor)		5/04-Present
Barry A. Sholem 49	Principal, MDS Capital, L.P. (venture capital company)		5/98-Present
William B. Summers, Jr. 54	Non-Executive Chairman, McDonald Investments Inc. (investment bank)		5/04-Present
Scott A. Wolstein 52	Chairman of the Board of Directors of the Company and Chief Executive Officer of the Company		11/92-Present

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      Dean S. Adler is currently a principal with Lubert-Adler Partners, L.P. (“Lubert-Adler”), a private equity real estate investment company which he co-founded in 1997. Lubert-Adler currently manages over $2.5 billion in equity and $8 billion in assets in four real estate funds. Mr. Adler is a certified public accountant and a graduate of the Wharton School and the University of Pennsylvania Law School. He currently serves as a member of the Board of Directors of Bed Bath & Beyond, Inc. and Electronics Boutique, Inc. Mr. Adler has served on community boards, including the UJA National Young Leadership Cabinet, and he is currently a member of the Alexis de Tocqueville Society of the United Way.

      Terrance R. Ahern is a co-founder and principal of The Townsend Group, an institutional real estate consulting firm formed in 1986, which represents primarily tax-exempt clients such as public and private pension plans, endowment, foundation and multi-manager investments. Mr. Ahern was formerly a member of the Board of Directors of the Pension Real Estate Association (PREA) and the Board of Governors of the National Association of Real Estate Investment Trusts (NAREIT). Prior to founding The Townsend Group, Mr. Ahern was a vice president of a New York-based real estate investment firm and was engaged in the private practice of law. Mr. Ahern received a B.A. and J.D. from Cleveland State University.

      Mohsen Anvari is a Professor in the Department of Banking and Finance at Weatherhead School of Management (“Weatherhead”) at Case Western Reserve University since August 2001. From August 2001 until January 2004, Dr. Anvari served as Dean of Weatherhead and Albert J. Weatherhead, III Professor of Management. From February 1995 until August 2001, Dr. Anvari served as Dean of the John Molson School of Business at Concordia University in Montreal, Canada.

      Robert H. Gidel has been the Managing Director of Liberty Partners, LP, a partnership that makes investments in real estate operating companies and partnerships, since 1998. He is a member of the Board of Directors of Global Signal Inc., a REIT, of which he is a member of the governance committee and the compensation committee. He is also a trustee of Fortress Registered Investment Trust and a director of Fortress Investment Fund II, LLC, both of which are registered investment companies. Since 1996, Mr. Gidel has been the independent member of the investment committee of the Lone Star Funds (I, II, III, IV & V). This committee approves but does not generate all investments made by the Lone Star Opportunity Funds. He is a graduate of the Warrington College of Business at the University of Florida.

      Victor B. MacFarlane has been the Managing Principal of MacFarlane Partners, which provides real estate advisory services to institutional investors, since he founded the partnership in 1987. Mr. MacFarlane has 24 years of real estate experience and holds a master’s degree in business administration from the University of Pittsburgh, a juris doctor degree from the University of California, Los Angeles, and a bachelor’s degree in university studies from the University of New Mexico. He is a member of the boards of trustees of both the Urban Land Institute and the Initiative for a Competitive Inner City. He serves on the Board of Directors of Stanford Hospital & Clinics and the policy advisory board of the Fisher Center for Real Estate and Urban Economics at the University of California, Berkeley. He also is a member of the International Council of Shopping Centers, the Pension Real Estate Association (PREA), the Chief Executives Organization and the World Presidents Organization.

      Craig Macnab became the Chief Executive Officer and a Director of Commercial Net Lease Realty, a publicly-traded real estate investment trust, in February 2004. Mr. Macnab was the Chief Executive Officer, President and a Director of JDN Realty Corporation (“JDN”) from 2000 to 2003, when JDN was acquired by the Company. Prior to joining JDN, Mr. Macnab was a consultant from 1999 through April 2000. Mr. Macnab is also currently a director of Per Se Technologies, Inc. and Commercial Net Lease Realty.

      Scott D. Roulston has been the Managing Partner and a Director of Fairport Asset Management, LLC, a registered investment advisor providing investment management and wealth management services, since 2004 and from 2001 to 2004 was the firm’s President and Chief Executive Officer. Mr. Roulston is also President of the Fairport Funds and Roulston Research Corp., a registered broker dealer. From 1990 until 2001, Mr. Roulston was the President and Chief Executive Officer of Roulston & Company, until it merged with The Hickory Group in 2001 to form Fairport Asset Management, LLC.

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      Barry A. Sholem became a partner of MDS Capital, L.P., a venture capital company, and head of its real estate fund in July 2004. From 1995 until August 2000, Mr. Sholem was the Chairman of Donaldson, Lufkin & Jenrette, Inc. Real Estate Capital Partners, a $2 billion real estate fund that invests in a broad range of real estate-related assets, which he formed in January 1995, and, from August 2000 to November 2003, he was a Managing Director of Credit Suisse First Boston. Mr. Sholem is a graduate of Brown University and Northwestern University’s J.L. Kellogg Graduate School of Management. He is currently active in the Urban Land Institute (RCMF Council), the International Council of Shopping Centers, the U.C. Berkeley Real Estate Advisory Board and the Business Roundtable.

      William B. Summers, Jr. has been the Non-Executive Chairman of McDonald Investments Inc., an investment banking, brokerage and investment advisory firm, since 2000. From 1994 until 1998, Mr. Summers was the President and Chief Executive Officer of McDonald Investments Inc. and from 1998 until 2000, Mr. Summers was the Chairman and Chief Executive Officer of McDonald Investments, Inc. Mr. Summers is also currently a director of Wilson Greatbatch Technologies, Inc. and RPM International, Inc., and a member of the Advisory Board of Molded Fiber Glass Companies and the Board of Executives of the New York Stock Exchange.

      Scott A. Wolstein has been the Chief Executive Officer and a director of the Company since its organization in 1992. Mr. Wolstein has been Chairman of the Board of Directors of the Company since May 1997 and was President of the Company from its organization until May 1999, when Mr. Jacobstein joined the Company. Prior to the organization of the Company, Mr. Wolstein was a principal and executive officer of the Developers Diversified Group, the Company’s predecessor. Mr. Wolstein is a graduate of the Wharton School at the University of Pennsylvania and of the University of Michigan Law School. He is a former member of the Board of Governors of the National Association of Real Estate Investment Trusts (NAREIT), and is currently a member of the boards of the International Council of Shopping Centers, the Real Estate Roundtable, the Zell-Lurie Wharton Real Estate Center, Greater Cleveland Partnership and Cleveland Development Partnership and serves as the Chairman of the State of Israel Bonds, Ohio Chapter. Mr. Wolstein is also a member of the Urban Land Institute and the Pension Real Estate Association (PREA). He has also served as President of the Board of Trustees of the United Cerebral Palsy Association of Greater Cleveland and as a member of the Board of the Great Lakes Theater Festival, The Park Synagogue and the Convention and Visitors Bureau of Greater Cleveland.

Corporate Governance

      The Board of Directors has adopted Corporate Governance Guidelines, which guide the Board of Directors in the performance of its responsibilities to serve the best interests of the Company and its shareholders. A copy of the Company’s Corporate Governance Guidelines is posted on the Company’s website, www.ddr.com, under “Investor Relations.”

Codes of Ethics

      Code of Ethics for Senior Financial Officers. The Company has a Code of Ethics for Senior Financial Officers that applies to the chief executive officer, chief operating officer, chief financial officer and other designated senior financial officers (collectively, “Senior Financial Officers”), of the Company. This code requires Senior Financial Officers to act with honesty and integrity; to endeavor to provide information that is full, fair, accurate, timely and understandable in all reports and documents that the Company files with, or submits to, the Securities and Exchange Commission and other public filings or communications made by the Company; to endeavor to comply faithfully with all laws, rules and regulations of federal, state and local governments and all applicable private or public regulatory agencies; to not knowingly or recklessly misrepresent material facts or allow their independent judgment to be compromised; to not use for personal advantage confidential information acquired in the course of their employment; to proactively promote ethical behavior among peers and subordinates in the work place; and to promptly report to the Audit Committee any violation or suspected violation of this code and to otherwise comply with the Company’s Violation Reporting and Non-Retaliation Policy. Only the Audit Committee or the Board of Directors, including a majority of the independent directors, may waive any provision of the code with respect to a Senior Financial Officer. Any such waiver will be

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promptly disclosed on the Company’s website and as otherwise required by rule or regulation. This code is posted on the Company’s website, www.ddr.com, under “Investor Relations.”

      Code of Business Conduct and Ethics. The Company also has a Code of Business Conduct and Ethics that addresses the Company’s commitment to honesty, integrity and the ethical behavior of the Company’s employees, officers and directors. This code governs the actions and working relationships of the Company’s employees, officers and directors with current and potential customers, consumers, fellow employees, competitors, government and self-regulatory agencies, investors, the public, the media, and anyone else with whom the Company has or may have contact. Only the Board of Directors or the Nominating and Corporate Governance Committee may waive any provision of the code with respect to an executive officer or director. Any such waiver will be promptly disclosed on the Company’s website and as otherwise may be required by rule or regulation. The Corporate Compliance Officer may waive any provision of the code with respect to all other employees. This code is posted on the Company’s website, www.ddr.com, under “Investor Relations.”

Reporting and Non-Retaliation Policy

      The Company is committed to integrity and ethical behavior and has adopted a Reporting and Non-Retaliation Policy. The purpose of the policy is to encourage all employees to disclose any alleged wrongdoing that may adversely impact the Company, the Company’s customers, shareholders, employees, investors or the public at large without fear of retaliation. The policy sets forth procedures for the reporting of alleged questionable auditing, accounting and internal control matters by employees on a confidential and anonymous basis and by other interested third parties, and a process for investigating such reported acts of alleged wrongdoing and retaliation. Reports may be made directly to the Audit Committee or to Global Compliance Services, a third party service retained by the Audit Committee. The Audit Committee receives complaints reported under the policy and oversees the investigation of such complaints.

Independent Directors

      The Board of Directors has affirmatively determined that all of the nominated directors, except for Messrs. Adler, Macnab and Wolstein, are “independent directors” within the meaning of the New York Stock Exchange’s listing standards. The Company’s Corporate Governance Guidelines provide that the Board of Directors will be comprised of a majority of independent directors and that only those directors or nominees who meet the listing standards of the NYSE will be considered independent. The basis for any determination that a relationship is not material will be disclosed in the Company’s annual proxy statement.

Lead Director

      In accordance with the Corporate Governance Guidelines, the Board of Directors has a lead director who must be an independent director and is selected by a majority of the non-management directors. The Board of Directors unanimously selected Mr. Gidel to serve as lead director. The lead director:

•  presides at all meetings of the Board of Directors at which the Chairman of the Board of Directors is not present;

•  serves as liaison between the Chairman of the Board of Directors and the non-management directors;

•  reviews and comments on information to be sent to the Board of Directors;

•  reviews and comments on meeting agendas for the Board of Directors;

•  reviews and comments on meeting schedules to assure that there is sufficient time for discussion of all agenda items;

•  has the authority to call meetings of non-management directors; and

•  if requested by major and institutional shareholders, ensures that he is available for consultation and direct communication.

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Meetings of Non-Management Directors

      After each meeting of the Board of Directors, non-management directors meet independently of the Chairman of the Board and these meetings are chaired by the lead director. In 2004, the non-management directors met on four occasions.

Committees and Meetings of the Board of Directors

      During the fiscal year ended December 31, 2004, the Board of Directors held ten meetings. Each director attended more than 75% of the aggregate number of meetings of the Board of Directors and committees on which he served in 2004. As stated in the Corporate Governance Guidelines, all directors are expected to attend the Company’s annual meeting of shareholders. All of the Company’s directors attended the 2004 annual meeting of shareholders, except for Mr. Adler and Mr. Wolstein. Mr. Wolstein did not attend due to the recent death of Bert L. Wolstein, the Company’s founder.

      During 2004, the Board of Directors had a Dividend Declaration Committee, an Executive Compensation Committee, a Nominating and Corporate Governance Committee, a Pricing Committee and an Audit Committee. The Board of Directors has approved the written charters of the Audit Committee, Executive Compensation Committee and Nominating and Corporate Governance Committee, which can be found under the “Investor Relations” section of the Company’s website at www.ddr.com. Each of the Audit Committee, Executive Compensation Committee and Nominating and Corporate Governance Committee conducts a self evaluation and review of its charter annually.

      Dividend Declaration Committee. The Dividend Declaration Committee currently consists of Messrs. Adler, Macnab and Wolstein. On May 18, 2004, the terms on the committee of Albert T. Adams and David M. Jacobstein, former members of the Board of Directors, ended and Messrs. Adler and Macnab were appointed. The Dividend Declaration Committee determines if and when the Company should declare dividends on its capital shares and the amount thereof, consistent with the dividend policy adopted by the Board of Directors. The Dividend Declaration Committee held eight meetings in 2004.

      Executive Compensation Committee. The Executive Compensation Committee currently consists of Messrs. Gidel, MacFarlane, Sholem and Summers. On February 24, 2004, Messrs. Adams and Adler resigned from the committee and Mr. MacFarlane was appointed. Mr. Summers was appointed to the committee on May 18, 2004. The Executive Compensation Committee determines compensation for the Company’s executive officers and directors, oversees the Company’s compensation and employee benefit plans and produces the annual report on executive compensation included in the Company’s annual proxy statement. All of the members of the Executive Compensation Committee are independent as independence is currently defined in the rules and regulations of the Securities and Exchange Commission, the New York Stock Exchange listing standards and the Company’s Corporate Governance Guidelines. The Executive Compensation Committee held three meetings in 2004.

      Nominating and Corporate Governance Committee. The Nominating and Corporate Governance Committee currently consists of Messrs. Ahern and MacFarlane and Dr. Anvari. On February 24, 2004, Messrs. Adams and Macnab resigned from the committee and Mr. MacFarlane was appointed. On May 18, 2004, Mr. Gidel’s term on the committee ended and Dr. Anvari was appointed. The Nominating and Corporate Governance Committee identifies individuals qualified to become members of the Board of Directors and recommends to the Board of Directors the persons to be nominated as directors at each annual meeting of shareholders; recommends to the Board of Directors qualified individuals to fill vacancies on the Board of Directors; reviews and recommends to the Board of Directors qualifications for committee membership and committee structure and operations; recommends directors to serve on each committee; develops and recommends to the Board of Directors corporate governance policies and procedures in compliance with the Sarbanes-Oxley Act of 2002 and other rules and regulations relating to the Company’s corporate governance; oversees compliance and approves any waivers of the Company’s Code of Business Conduct and Ethics and leads the Board of Directors in its annual review of the performance of the Board of Directors. All of the members of the Nominating and Corporate Governance Committee are independent as independence is currently defined in the New York Stock Exchange

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listing standards and the Company’s Corporate Governance Guidelines. The Nominating and Corporate Governance Committee held five meetings in 2004.

      The committee will consider suggestions forwarded by shareholders to the Secretary of the Company concerning qualified candidates for election as directors. To recommend a prospective nominee for the Nominating and Corporate Governance Committee’s consideration, a shareholder may submit the candidate’s name and qualifications to the Company’s Secretary, Joan U. Allgood, at the following address: 3300 Enterprise Parkway, Beachwood, Ohio 44122. The Nominating and Corporate Governance Committee has not established specific minimum qualifications a candidate must have in order to be recommended to the Board of Directors. However, in determining qualifications for new directors, the committee will consider potential members’ qualifications as independent under the New York Stock Exchange’s listing standards and the definition of independence set forth in the Company’s Corporate Governance Guidelines, as well as diversity, age, skill and experience in the context of the needs of the Board of Directors. The Nominating and Corporate Governance Committee will consider a pool of potential board candidates established from recommendations from shareholders and third parties, including management and current directors. Although the Nominating and Corporate Governance Committee may retain a board search consultant to supplement the pool of potential board candidates, it has not engaged a consultant at this time.

      Pricing Committee. The Pricing Committee currently consists of Messrs. Summers and Wolstein and Dr. Anvari. On May 18, 2004, Messrs. Gidel and Sholem’s terms on the committee ended and Dr. Anvari and Mr. Summers were appointed. The Pricing Committee is authorized to approve the price and terms of offerings of the Company’s debt and equity securities. The Pricing Committee held no meetings and acted solely by written consent in 2004.

      Audit Committee. The Audit Committee currently consists of Messrs. Ahern, Roulston and Summers. On May 18, 2004, Mr. Gidel’s term on the committee ended and Mr. Roulston was appointed. On November 16, 2004, Mr. Sholem’s term on the committee ended and Mr. Summers was appointed. The Audit Committee assists the Board of Directors in overseeing the integrity of the financial statements of the Company, the Company’s compliance with legal and regulatory requirements, the Company’s independent registered public accounting firm’s qualifications and independence, and the performance of the Company’s internal audit function and independent registered public accounting firm; and prepares the Audit Committee Report included in the Company’s annual proxy statement. All of the members of the Audit Committee are independent as independence is currently defined in the rules and regulations of the Securities and Exchange Commission, the New York Stock Exchange listing standards and the Company’s Corporate Governance Guidelines. The Board of Directors has determined that each member of the Audit Committee is a “financial expert” within the meaning of Item 401 of Regulation S-K under the federal securities laws. The Audit Committee held five meetings in 2004.

Audit Committee Report

      In accordance with its written charter adopted by the Board of Directors, the Audit Committee assists the Board of Directors in fulfilling its responsibility for oversight of the quality and integrity of the accounting, auditing and financial reporting practices of the Company. The Audit Committee meets quarterly to review quarterly or annual financial information prior to its release and inclusion in SEC filings. As part of each meeting, the Audit Committee has the opportunity to meet independently with management and the Company’s independent registered public accounting firm.

      In discharging its oversight responsibility as to the audit process, the Audit Committee obtained a formal written statement from the independent registered public accounting firm describing all relationships between the independent registered public accounting firm and the Company that might bear on the independent registered public accounting firm’s independence consistent with Independence Standards Board Standard No. 1, “Independence Discussions with Audit Committees,” discussed with the independent registered public accounting firm any relationships that may impact its objectivity and independence, and satisfied itself as to the independent registered public accounting firm’s independence.

      The Audit Committee reviewed and discussed with the independent registered public accounting firm all communications required by generally accepted auditing standards, including those described in Statement on

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Auditing Standards No. 61, as amended, “Communication with Audit Committees,” and reviewed and discussed the results of the independent registered public accounting firm’s examination of the financial statements.

      The Audit Committee reviewed and discussed the audited financial statements of the Company for the year ended December 31, 2004 with management and the independent registered public accounting firm. Management has the responsibility for the preparation of the Company’s financial statements, and the independent registered public accounting firm has the responsibility for the examination of those statements.

      Based on the above-described review and discussions with management and the independent registered public accounting firm, the Audit Committee recommended to the Board of Directors that the Company’s audited financial statements be included in its Annual Report on Form 10-K for the year ended December 31, 2004 for filing with the Securities and Exchange Commission.

Audit Committee

Terrance R. Ahern, Chairman

Scott D. Roulston

William B. Summers, Jr.

Compensation of Directors

      The Company pays non-employee directors an annual fee of $70,000, consisting of a cash payment of $35,000, paid in quarterly installments, and common share grant with an aggregate value of approximately $35,000 based on the fair market value of the shares on the business day preceding the grant date. Beginning in 2005, the common share grant will be made on June 1 of each year for services rendered during the prior year of service on the Board of Directors and the shares will be fully vested on the date of grant. On January 2, 2004, the Company granted to its non-employee directors 1,043 restricted common shares for services rendered during 2003. The restricted shares vest in one-third increments, the first increment of which vested on January 2, 2004 and the second and third increments will vest annually on the anniversary of the grant. The Chairmen of the Audit Committee, the Executive Compensation Committee and the Nominating and Corporate Governance Committee are each entitled to receive an additional cash payment of $10,000, as a fee for services rendered as chairmen of the committees. The lead director, if not a committee chairperson, will also receive an additional cash payment of $10,000, as a fee for services rendered as lead director. Each non-employee director is also reimbursed for expenses incurred in attending meetings.

      Directors’ Deferred Compensation Plans. Non-employee directors have the right to defer all or a portion of the cash portion of their fees pursuant to the Company’s directors’ deferred compensation plans. The Company’s directors’ deferred compensation plans are unfunded and participants’ contributions are converted to units, based on the market value of the common shares, so that each unit is the economic equivalent of one common share. Settlement of units is made in cash at a date determined by the participant at the time a deferral election is made. Messrs. Adler, Ahern, MacFarlane, Macnab and Roulston and Dr. Anvari elected to defer the cash portion of their 2004 fees pursuant to the Company’s directors’ deferred compensation plans. During their terms as directors, Messrs. Adler, Ahern, MacFarlane, Macnab and Roulston and Dr. Anvari have deferred compensation represented by the following number of units:

	Number of
	Units under the		Value of Units as of
	Directors’ Deferred		the Year Ended
Name	Compensation Plans		December 31, 2004 ($)
Dean S. Adler		9,739		432,134
Terrance R. Ahern		7,205		319,695
Victor B. MacFarlane		3,015		133,780
Craig Macnab		1,906		84,570
Mohsen Anvari		677		30,028
Scott D. Roulston		677		30,028

      Equity Deferred Compensation Plans. Directors have the right to defer the vesting of restricted share grants and, for compensation earned prior to December 31, 2004, the gain otherwise recognizable upon the

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exercise of options in accordance with the terms of the Company’s equity deferred compensation plans. The value of participants’ contributions are converted into units, based on the market value of the common shares, so that each unit is the economic equivalent of one common share. The equity deferred compensation plans are unfunded. The Company has established two rabbi trusts. Common shares equal to the number of units credited to participants’ accounts under the plans are contributed to the first trust. The second trust will receive the amount of participants’ aggregate dividend equivalent account balances under the plans if a participant elects to defer dividends. In the event of the Company’s insolvency, the assets of the trusts are available to general creditors. Settlement of units is made in common shares at a date determined by the participants at the time a deferral election is made. Mr. Ahern has deferred compensation represented by 333 units having a market value of $14,775 as of December 31, 2004.

PROPOSAL THREE: RATIFICATION OF THE SELECTION OF

PRICEWATERHOUSECOOPERS LLP AS THE COMPANY’S INDEPENDENT

ACCOUNTANTS

      PricewaterhouseCoopers LLP served as independent registered public accounting firm to the Company in 2004 and is expected to be retained to do so in 2005. The Board of Directors has directed that management submit the selection of independent registered public accounting firm for ratification by the shareholders at the Annual Meeting. A representative of PricewaterhouseCoopers LLP is expected to be present at the Annual Meeting and will have an opportunity to make a statement and to respond to appropriate questions from shareholders.

      Shareholder ratification of the selection of PricewaterhouseCoopers LLP as the Company’s independent registered public accounting firm is not required by the Company’s code of regulations or otherwise. However, the Board of Directors is submitting the selection of PricewaterhouseCoopers LLP to the shareholders for ratification as a matter of good corporate practice. If the shareholders do not ratify the selection, the Audit Committee will reconsider whether or not to retain the firm. In such event, the Audit Committee may retain PricewaterhouseCoopers LLP, notwithstanding the fact that the shareholders did not ratify the selection, or select another nationally recognized accounting firm without re-submitting the matter to the shareholders. Even if the selection is ratified, the Audit Committee reserves the right in its discretion to select a different nationally recognized accounting firm at any time during the year if it determines that such a change would be in the best interests of the Company and its shareholders.

Fees Paid to PricewaterhouseCoopers LLP

      Audit Fees. The aggregate fees billed for professional services rendered by PricewaterhouseCoopers LLP for the audit of the Company’s annual financial statements for the years ended December 31, 2004 and 2003, as well as audit related tax services, registration statement related services and acquisition audits performed pursuant to SEC filing requirements for 2004 and 2003 were $1,866,826 and $1,071,651, respectively. Of these amounts, the registration related services were $841,976 and $277,589 for 2004 and 2003, respectively. The fees for registration related services were significantly higher in 2004 compared to 2003, as a result of the Company’s growth oriented business strategy, which includes the acquisition of real estate and real estate investments. This strategy led to the Company undertaking significant transactions during 2004, and the financial statements of acquired real estate assets and the effects of such transactions on the Company’s financial statements had to be incorporated into the Company’s registration statements. Of the fees billed for 2004, the Sarbanes-Oxley section 404 audit fees were $417,000. Fees incurred in 2003 with respect to Sarbanes-Oxley section 404 were classified as “Audit-related” as set forth below, since the audit of the Company’s internal control over financial reporting was not yet required.

      Audit-Related Fees. The aggregate fees billed for assurance and related services by PricewaterhouseCoopers LLP that are reasonably related to the performance of the audit or review of the Company’s financial

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statements and are not reported under “Audit Fees” above for the years ended December 31, 2004 and 2003 were 618,274 and $524,180, respectively. Such audit-related fees are detailed as follows:

		2004		2003
Separate entity and joint venture audits and reviews		$	618,274	$	508,956
Sarbanes-Oxley section 404 planning			—		15,224
	Total	$	618,274	$	524,180

      The Company requires the engagement of an independent registered public accounting firm to perform audit-related services due in part to its numerous joint venture investments, which have separate financial statement reporting requirements.

      Tax Fees. The aggregate fees billed for professional services rendered by PricewaterhouseCoopers LLP for tax compliance and tax consulting services for the years ended December 31, 2004 and 2003 were $338,895 and $139,100 respectively, which consisted of $55,825 and $79,100 in tax compliance services, respectively.

      All Other Fees. The aggregate fees billed for other products and services provided by PricewaterhouseCoopers LLP for the years ended December 31, 2004 and 2003 were $1,620, relating primarily to software licensing for accounting and professional standards.

      Policy on Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services of Independent Auditors. The Audit Committee has not established a policy for the pre-approval of audit and permissible non-audit services. The Audit Committee pre-approves, on an individual basis, all audit and permissible non-audit services provided by the independent registered public accounting firm. These services may include audit services, audit-related services, tax services and other services.

      Auditor Independence. The Audit Committee believes that the non-audit services provided by PricewaterhouseCoopers LLP are compatible with maintaining PricewaterhouseCoopers LLP’s independence.

      The Board of Directors Recommends That the Shareholders Vote FOR the Proposal to Ratify the Selection of PricewaterhouseCoopers LLP as the Company’s Independent Accountants for the Company’s Fiscal Year Ending December 31, 2005.

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EXECUTIVE COMPENSATION

      The following information is set forth with respect to the Company’s Chief Executive Officer and the other four most highly compensated executive officers, each of whom was serving as an executive officer at December 31, 2004 (the “named executive officers”).

Summary Compensation Table

											Long Term Compensation Awards
		Annual Compensation									Restricted		Securities
											Stock		Underlying		Long Term			Other
Name and		Fiscal				Bonus		Other Annual			Award(s)		Options/		Incentive			Compensation
Principal Position		Year		Salary($)		($)(1)		Compensation			($)(2)		SARs(#)		Payout($)			($)(3)
Scott A. Wolstein			2004		598,000		747,500		650,000	(4)		1,513,818		173,988		825,000	(5)		68,590
	Chairman and		2003		594,167		747,500		650,000	(4)		1,132,037		188,361		878,393	(5)		72,382
	Chief Executive Officer		2002		575,000		560,000		—			1,185,662		229,598		1,963,333	(5)		80,253
David M. Jacobstein			2004		406,667		408,000		—			600,006		68,967		—			40,685
	President and		2003		397,500		400,000		—			433,136		72,069		—			51,091
	Chief Operating Officer		2002		385,000		290,000		—			453,640		87,846		—			42,586
Daniel B. Hurwitz			2004		360,917		362,000		—			452,729		52,026		—			32,600
	Executive Vice		2003		350,833		355,000		—			315,560		52,507		—			39,647
	President		2002		330,000		235,000		—			330,519		64,002		—			32,368
Joan U. Allgood			2004		254,167		153,000		—			150,002		17,241		—			22,050
	Senior Vice President		2003		249,167		150,000		—			114,839		19,109		—			18,404
			2002		245,000		61,250		—			113,311		21,866		—			14,885
Timothy J. Bruce			2004		260,833		132,500		—			135,110		15,519		—			17,425
	Senior Vice President (6)		2003		240,000		120,000		—			18,745		3,120		—			14,400
			2002		74,616		40,000		45,000	(7)		—		100,000		—			3,100

(1)	For a description of the method used in determining the bonuses paid to executive officers, see “Employment Agreements” and “Report of the Executive Compensation Committee of the Board of Directors.”
(2)	On February 28, 2002, Mr. Wolstein was granted 59,581 restricted common shares, Mr. Jacobstein was granted 22,796 restricted common shares, Mr. Hurwitz was granted 16,609 restricted common shares and Mrs. Allgood was granted 5,694 restricted common shares. On February 25, 2003, Mr. Wolstein was granted 49,219 restricted common shares, Mr. Jacobstein was granted 18,832 restricted common shares, Mr. Hurwitz was granted 13,720 restricted common shares, Mrs. Allgood was granted 4,993 restricted common shares and Mr. Bruce was granted 815 restricted common shares. On February 24, 2004, Mr. Wolstein was granted 41,680 restricted common shares, Mr. Jacobstein was granted 16,520 restricted common shares, Mr. Hurwitz was granted 12,465 restricted common shares, Mrs. Allgood was granted 4,130 restricted common shares and Mr. Bruce was granted 3,720 restricted common shares. One-fifth of each grant vested on the date of the grant and an additional one-fifth vests on each anniversary date following the date of grant. Dividends on these restricted shares are paid to the individuals in cash.
(3)	The value, at December 31, 2004, of contributions made pursuant to the Company’s Profit Sharing Plan and Trust equaled $8,000, $8,000, $5,190, $7,415 and $1,600, respectively, for Messrs. Wolstein, Jacobstein, Hurwitz and Bruce and Mrs. Allgood. The contributions made pursuant to the Company’s elective deferred compensation plans equaled $32,985, $16,945, $16,285, $4,950 and $9,825, respectively, for Messrs. Wolstein, Jacobstein, Hurwitz and Bruce and Mrs. Allgood. Mr. Wolstein received a $10,000 allowance and Mr. Jacobstein received a $4,725 allowance relating to fiscal year 2004 tax and financial planning expenses; Messrs. Wolstein, Jacobstein, Hurwitz and Bruce and Mrs. Allgood received $5,340, $7,125, $1,985, $6,000 and $6,000, respectively, relating to automobile allowances pursuant to their employment agreements. Messrs. Wolstein, Jacobstein and Hurwitz and Mrs. Allgood received $12,265, $3,890, $9,140 and $3,685, respectively, for the payment of business and country club dues.
(4)	Pursuant to the employment agreement of Mr. Wolstein, the Company was obligated to provide certain life insurance benefits to his family and him; however, these payments may be prohibited by the Sarbanes-Oxley Act of 2002. Therefore, the employment agreement of Mr. Wolstein was amended and Mr. Wolstein received

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	$650,000 in additional compensation in lieu of the life insurance benefits (see “Report of the Executive Compensation Committee of the Board of Directors”).
(5)	Paid pursuant to the incentive compensation agreement between the Company and Mr. Wolstein in connection with the Company’s investment in the Retail Value Investment Program (“RVIP”). The Company formed RVIP, which invests in retail properties that are in need of re-tenanting and marketing repositioning on a national basis, with Prudential Real Estate Investors (“Prudential”). At the time RVIP was formed, Mr. Wolstein was required to maintain an equity interest in RVIP, which Mr. Wolstein subsequently assigned to the Company. As a condition to this assignment and the termination of the requirement that Mr. Wolstein maintain an equity interest, Prudential required Mr. Wolstein to retain a significant economic interest in RVIP. The RVIP Incentive Compensation Agreement was entered into between the Company and Mr. Wolstein to satisfy this requirement. Pursuant to the agreement, Mr. Wolstein is entitled to receive between 0% and 25% of any distributions made to the general partners in the Retail Value Investment Program. The percentage of distributions earned is determined based on the Company’s achievement of either (i) an average annual total shareholder return of 6% to 12% or more or (ii) an average increase in per share Funds From Operations of 5% to 10% or more before deducting any compensation expense from distributions received.
(6)	Mr. Bruce joined the Company in September 2002.
(7)	Pursuant to the employment agreement of Mr. Bruce, the Company paid Mr. Bruce $25,000 as a relocation payment and $20,000 as special bonus compensation on the effective date of his employment agreement.

Option Grants In Last Fiscal Year

      The following table sets forth information with respect to the awarding of options to purchase common shares in 2004 to the named executive officers.

	Number
	of		Percent of
	Securities		Total Options						Grant
	Underlying		Granted To		Exercise				Date
	Options		Employees in		Price				Present
Name	(#)(1)		Fiscal Year(2)		($/Sh)		Expiration Date		Value($)(3)
Scott A. Wolstein		173,988		26.2		36.32		February 24, 2014		823,433
David M. Jacobstein		68,967		10.4		36.32		February 24, 2014		326,400
Daniel B. Hurwitz		52,026		7.8		36.32		February 24, 2014		246,223
Joan U. Allgood		17,241		2.6		36.32		February 24, 2014		81,596
Timothy J. Bruce		15,519		2.3		36.32		February 24, 2014		73,447

(1)	Options vest in one-third increments on each of the first three consecutive anniversaries of the date of grant and may be exercised, if at all, only with respect to those options that are vested.
(2)	Based on options to purchase an aggregate of 663,181 common shares granted to employees during 2004.
(3)	Based on the Black-Scholes options pricing model, adapted for use in valuing stock options granted to executives. The following assumptions were used in determining the values set forth in the table: (a) expected volatility of 22.7346% which reflects the daily closing prices of the common shares on the New York Stock Exchange for the 12-month period ended February 24, 2004, (b) risk-free rates of return of 3.05% for the options which expire in February 2014 (which percentage represents the yield on a United States Government Zero Coupon bond with a six-year maturity prevailing on the date on which the options were granted), (c) dividend yield of 5.07% for the options (which percentage represents an annualized distribution of $1.84 per common share divided by the exercise price of the options) and (d) the exercise of the options of a six-year term. No adjustments were made for nontransferability or risk of forfeiture of the options. The calculations were made using a price per common share and option exercise price of $36.32 for the options. The estimated present values in the table are not intended to provide, nor should they be interpreted as providing, any indication or assurance concerning future values of the common shares.

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Aggregate Option Exercises in 2004 and 2004 Year-End Option Values

      The following table sets forth information with respect to the value of options held by the named executive officers on December 31, 2004.

					Number of
					Securities
					Underlying
					Unexercised		Value of Unexercised
					Options at 2004		In-the-Money Options
	Shares				Year-End(#)		at 2004(1) Year-End($)
	Acquired on		Value		Exercisable/		Exercisable/
Name	Exercise(#)		Realized($)		Unexercisable		Unexercisable
Scott A. Wolstein		892,950		15,175,595		0/376,095		0/5,956,882
David M. Jacobstein		36,782		658,771		41,320/146,295		1,050,218/2,298,458
Daniel B. Hurwitz		67,800		1,212,805		0/108,365		0/1,688,909
Joan U. Allgood		48,133		1,097,915		0/37,270		0/589,406
Timothy J. Bruce		—		—		67,706/50,933		1,454,210/885,392

(1)  Based on the market price of $44.37 per common share at the close of trading on December 31, 2004.

Employment Agreements

      The Company has entered into separate employment agreements with seven of its officers, including each of the named executive officers. Each of the employment agreements contains an “evergreen” provision that provides for an automatic extension of the agreement for an additional year (or two years in the case of Mr. Wolstein) at the end of each calendar year, subject to the right of either party to terminate by giving one year’s prior written notice in the case of Mr. Wolstein, or by the Company giving 90 days’ prior written notice in the case of Messrs. Jacobstein, Hurwitz and Bruce and Mrs. Allgood.

      The agreements provide for annual base salaries for 2004 of $598,000, $408,000, $362,100, $265,000 and $255,000 for Messrs. Wolstein, Jacobstein, Hurwitz and Bruce and Mrs. Allgood, respectively. The agreements for Messrs. Wolstein, Jacobstein, Hurwitz and Bruce and Mrs. Allgood provide for the use of an automobile or automobile allowance, a membership in a golf or social club for Messrs. Wolstein, Jacobstein and Hurwitz and Mrs. Allgood and, in the case of Mr. Wolstein, membership in a business club. In 2004, Mr. Wolstein received an allowance of $10,000 and Mr. Jacobstein received an allowance of $4,725 for tax return preparation and financial planning services. In addition, pursuant to Mr. Wolstein’s employment agreement, the Company was obligated to provide certain life insurance benefits to his family and him. Such insurance arrangement, commonly referred to as “split dollar life insurance,” is characterized as a loan for tax purposes and may be prohibited by the Sarbanes-Oxley Act of 2002, which prohibits a company from making loans to its executive officers and directors. As a result of the Sarbanes-Oxley Act of 2002, which was enacted on July 30, 2002, the Company did not make any premium payments on the insurance policies after that date. Mr. Wolstein’s employment agreement was amended to provide that the Company will no longer provide the life insurance benefits, and in lieu of the life insurance benefits, the Company will provide Mr. Wolstein an additional $650,000 per year in compensation for fiscal years 2003 through 2007. After 2007, the Company has no further obligation to pay this additional compensation or to provide split-dollar life insurance benefits. The Company has retained the right to be reimbursed for all premiums payable on split-dollar life insurance policies prior to July 30, 2002 from the proceeds payable on the policy.

      Pursuant to the agreements, Mr. Wolstein is entitled to a bonus of from 50% to 125% of his annual base salary, Mr. Jacobstein is entitled to a bonus of from 25% to 100% of his annual base salary, Mr. Hurwitz is entitled to a bonus of from 25% to 100% of his base salary, Mrs. Allgood is entitled to a bonus of from 20% to 60% of her base salary and Mr. Bruce is entitled to a bonus of from 15% to 50% of his base salary. See “Report of the Executive Compensation Committee of the Board of Directors — Components of the Compensation Plan — Bonuses” for a discussion of the methods used to determine these bonuses.

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Change in Control Agreements

      The Company has entered into a Change in Control Agreement with each officer who has an employment agreement, including each of the named executive officers. Under the agreements, certain benefits are payable by the Company if a “Triggering Event” occurs within two years (or three years for Mr. Wolstein) after a “Change in Control.”

      A “Triggering Event” occurs if within two years (or three years in the case of Mr. Wolstein) after a Change in Control (a) the Company terminates the employment of the named executive officer, other than in the case of a “Termination For Cause” (as defined in the applicable Change in Control Agreement); (b) the Company reduces the named executive officer’s title, responsibilities, power or authority in comparison with his or her title, responsibilities, power or authority at the time of the Change in Control; (c) the Company assigns the named executive officer duties that are inconsistent with the duties assigned to the named executive officer on the date on which the Change in Control occurred and which duties the Company persists in assigning to the named executive officer despite the prior written objection of that officer; (d) the Company reduces the named executive officer’s base compensation, his or her group health, life, disability or other insurance programs (including any such benefits provided to Executive’s family), his or her pension, retirement or profit-sharing benefits or any benefits provided by the Company’s Equity-Based Award Plans, or any substitute therefor, or excludes him or her from any plan, program or arrangement in which the other executive officers of the Company are included; or (e) the Company requires the named executive officer to be based at or generally work from any location more than 50 miles from the geographical center of Cleveland, Ohio.

      A “Change in Control” occurs if (a) any person or group of persons, acting alone or together with any of its affiliates or associates, acquires a legal or beneficial ownership interest, or voting rights, in 20% or more of the outstanding common shares; (b) at any time during a period of 24 consecutive months, individuals who were directors of the Company at the beginning of the period no longer constitute a majority of the members of the Board of Directors unless the election, or the nomination for election by the Company’s shareholders, of each director who was not a director at the beginning of the period is approved by at least a majority of the directors who are in office at the time of the election or nomination and were directors at the beginning of the period; or (c) a record date is established for determining shareholders of the Company entitled to vote upon (i) a merger or consolidation of the Company with another real estate investment trust, partnership, corporation or other entity in which the Company is not the surviving or continuing entity or in which all or a substantial part of the outstanding shares are to be converted into or exchanged for cash, securities, or other property, (ii) a sale or other disposition of all or substantially all of the assets of the Company or (iii) the dissolution of the Company. The agreement of Mr. Hurwitz provides that if certain conditions are met, a spin-off of the Company’s real estate development business is not a Change in Control.

      Within 30 days after the occurrence of a Triggering Event, the Company must pay the named executive officer an amount equal to the sum of two times (or three times in the case of Mr. Wolstein) the maximum annual salary and bonus then payable to the officer. In addition, the Company agreed to continue to provide insurance benefits that are comparable to or better than those provided to the named executive officer at the time of the Change in Control until the earlier of two years from the date of the Triggering Event and the date the named executive officer becomes eligible to receive comparable or better benefits from a new employer. The terms of these agreements, including the definition of Change in Control, may be impacted by the American Jobs Creation Act of 2004. These agreements will likely be amended after final regulations are promulgated.

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Performance Graph

      Set forth below is a line graph comparing the cumulative total return of a hypothetical investment in the common shares with the cumulative total return of a hypothetical investment in each of the Russell 2000 Index and the NAREIT Equity REIT Total Return Index based on the respective market prices of each such investment on the dates shown below, assuming an initial investment of $100 on January 1, 2000 and the reinvestment of dividends.

	1/01/00		12/31/00		12/31/2001		12/31/2002		12/31/2003		12/31/2004
Developers Diversified Realty Corporation	$	100.00	$	114.70	$	179.04	$	220.84	$	357.41	$	495.93
Russell 2000 Index		100.00		97.43		99.86		79.40		118.81		140.58
NAREIT Equity REIT Total Return		100.00		126.37		143.97		149.47		204.98		269.70

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Report of the Executive Compensation Committee of the Board of Directors

     Introduction

      The compensation of the Company’s executive officers is currently determined by the Executive Compensation Committee of the Company’s Board of Directors (the “Committee”). In 2004, the Committee was comprised of Robert H. Gidel, Chairman of the Committee, Albert T. Adams, Dean S. Adler and Barry A. Sholem until February 24, 2004, on which date Messrs. Adams and Adler’s term on the Committee ended and Victor B. MacFarlane was appointed, and on May 18, 2004, William B. Summers, Jr. was appointed.

     Philosophy

      The primary objectives of the Committee in determining executive compensation for 2004 were (i) to provide a competitive total compensation package that enables the Company to attract and retain qualified executives and align their compensation with the Company’s overall business strategies and (ii) to provide each executive officer with a significant equity stake in the Company through grants of equity-based awards. The Committee determines compensation for those officers considered “executive officers” under the rules and regulations of the Securities and Exchange Commission.

      To this end, the Committee determined executive compensation consistent with a philosophy of compensating executive officers based on their responsibilities, the Company’s performance and the achievement of established annual goals. The primary components of the Company’s executive compensation program are (i) base salaries and certain other annual compensation, (ii) bonuses and (iii) grants of stock options, restricted common shares and performance units. Each of these elements is discussed below.

     Components of the Compensation Program

      Base Salaries and Certain Other Annual Compensation. The base salaries and certain other annual compensation for the Company’s executive officers in 2004 were determined with reference to the experience of the officers as compared to other executives in the REIT industry, the Company’s past practice and comparisons of compensation paid by companies in two peer groups (which may differ in composition from the peer group used in the Performance Graph): REITs of similar size to the Company and REITs with retail assets as their primary focus. In addition, other companies that compete with the Company for investment dollars and talent, as well as companies maintaining operations in similar geographic locations to the Company, were considered. The Committee engaged an outside consultant to assess the competitiveness of the Company’s existing compensation plan. Fundamental requirements of the program include the establishment of competitive compensation levels and the setting of rewards consistent with individual contributions. Pursuant to their employment agreements, Messrs. Wolstein, Jacobstein, Hurwitz and Bruce and Mrs. Allgood receive certain additional benefits described under the heading “Executive Compensation — Employment Agreements.” The Committee believes that these benefits assist the Company by facilitating the development of important relationships between officers and members of the business community.

      After analysis, and based upon the recommendation of the Company’s outside consultant, the Committee determined that, for 2004, the base salary of Mr. Wolstein should be $598,000 per year. In addition, pursuant to Mr. Wolstein’s employment agreement, the Company was obligated to provide certain life insurance benefits to his family and him. Such insurance arrangement, commonly referred to as “split dollar life insurance,” is characterized as a loan for tax purposes and may be prohibited by the Sarbanes-Oxley Act of 2002, which prohibits a company from making loans to its executive officers and directors. As a result of the Sarbanes-Oxley Act of 2002, which was enacted on July 30, 2002, the Company did not make any premium payments on the insurance policies after that date. Mr. Wolstein’s employment agreement was amended to provide that the Company will no longer provide the life insurance benefits, and in lieu of the life insurance benefits, the Company will provide Mr. Wolstein an additional $650,000 per year in compensation for fiscal years 2003 through 2007. After 2007, the Company has no further obligation to pay this additional compensation or to provide split-dollar life insurance benefits. The Company has retained the right to be reimbursed for all premiums payable on split-dollar life insurance policies prior to July 30, 2002 from the proceeds payable on the policy.

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      Bonuses. The Company bases annual performance bonuses upon the participants’ levels of responsibility and salary, overall corporate performance and individual or qualitative performances. The bonuses are in the form of threshold, target and maximum incentive opportunities which are attained if the Company reaches certain performance benchmarks tied primarily to Funds From Operations per common share and if the participants are given a favorable qualitative assessment of their individual contributions and efforts.

      Because the Company achieved its Funds From Operations targets in 2004, and the executives made significant contributions to the Company’s overall performance, the Committee determined that bonuses should be awarded to executives at the maximum level. In 2004, Mr. Wolstein earned a bonus equal to approximately 125% of his 2004 base salary and Messrs. Jacobstein, Hurwitz and Bruce and Mrs. Allgood each earned a bonus equal to approximately 100%, 100%, 50% and 60%, respectively, of his or her 2004 base salary.

      Restricted Shares and Performance Units. All of the Company’s executive officers are eligible to receive awards of restricted common shares of the Company and performance units pursuant to the 1996 Developers Diversified Realty Corporation Equity-Based Award Plan (the “1996 Award Plan”), the 1998 Developers Diversified Realty Corporation Equity-Based Award Plan (the “1998 Award Plan”), the 2002 Developers Diversified Realty Corporation Equity-Based Award Plan (the “2002 Award Plan”) and the 2004 Developers Diversified Realty Corporation Equity-Based Award Plan (the “2004 Award Plan”). Grants of performance units and restricted common shares reinforce the long-term goal of increasing shareholder value by providing the proper nexus between the interests of management and the interests of the Company’s shareholders.

      To date, all of the Company’s awards of restricted common shares have been service-based awards that may be earned over a period of time to encourage the participant’s continued employment with the Company. Mr. Wolstein was granted 41,680 restricted common shares on February 24, 2004. The shares vest annually in 20% increments with the first 8,336 vesting on the date of the award. Based on the recommendations of the Company’s outside compensation consultant, in 2004 the Company granted an aggregate of 36,835 restricted common shares to its named executive officers (not including Mr. Wolstein) and an aggregate of 19,115 restricted common shares to certain officers of the Company in addition to Messrs. Wolstein, Jacobstein, Hurwitz and Bruce and Mrs. Allgood.

      In 2000, Mr. Wolstein was granted 30,000 performance units that converted to a number of common shares based on the performance of the common shares over a five-year period ended December 31, 2004. Pursuant to the conversion formula, Mr. Wolstein received 200,000 shares, of which 30,000 common shares vested on January 1, 2005 and the remaining common shares awarded will vest annually in 20% increments with the first 20% vesting on January 1, 2006. In 2002, Mr. Wolstein was granted an additional 30,000 performance units that will convert to a number of common shares based on the performance of the common shares over a five-year period ending December 31, 2006. Pursuant to the conversion formula, the minimum number of common shares Mr. Wolstein will receive is 30,000 and the maximum number is 200,000. The minimum 30,000 common shares received upon the conversion of the performance units granted in 2002 will vest on January 1, 2007 and the remaining common shares awarded will vest annually in 20% increments with the first 20% vesting on January 1, 2008. The grants of performance units to Mr. Wolstein were recommended by the Company’s outside compensation consultant.

      In 2002, Messrs. Jacobstein and Hurwitz were each granted 20,000 performance units that will convert to a number of common shares based on the performance of the common shares over a five-year period ending December 31, 2006. Pursuant to the conversion formula, the minimum number of common shares each of Messrs. Jacobstein and Hurwitz will receive is 20,000 and the maximum number is 133,333. The minimum 20,000 common shares received upon the conversion of the performance units granted in 2002 will vest on January 1, 2007 and the remaining common shares awarded will vest annually in 20% increments with the first 20% vesting on January 1, 2008.

      Stock Options. All of the Company’s executive officers are eligible to receive options to purchase common shares of the Company pursuant to the 1996 Award Plan, the 1998 Award Plan, the 2002 Award Plan and the 2004 Award Plan. The Developers Diversified Realty Corporation 1992 Employees’ Share Option Plan has expired; however, the plan terms remain applicable for the exercise of options granted pursuant to such plan. The Company believes that stock option grants are a valuable motivating tool and provide a long-term incentive to

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management. Stock option grants reinforce the long-term goal of increasing shareholder value by providing the proper nexus between the interests of management and the interests of the Company’s shareholders.

      RVIP Incentive Compensation Program. The Company formed the Retail Value Investment Program (“RVIP”) with Prudential Real Estate Investors (“Prudential”). RVIP invests in retail properties that are in need of re-tenanting and marketing repositioning on a national basis. At the time RVIP was formed, Mr. Wolstein was required to maintain an equity interest in RVIP. Mr. Wolstein subsequently assigned his interest to the Company in 1998. As a condition to this assignment and the termination of the requirement that Mr. Wolstein maintain an equity interest, Prudential required Mr. Wolstein to retain a significant economic interest in RVIP. The RVIP Incentive Compensation Agreement was entered into between the Company and Mr. Wolstein to satisfy this requirement. Pursuant to the agreement. Mr. Wolstein is entitled to receive between 0% and 25% of any distributions made to the general partners in the Retail Value Investment Program. The percentage of distributions earned is determined based on the Company’s achievement of either (i) an average annual total shareholder return of 6% to 12% or more or (ii) an average increase in per share Funds From Operations of 5% to 10% or more before deducting any compensation expense from distributions received. Pursuant to the agreement, Mr. Wolstein received $825,000 in incentive compensation in 2004.

Executive Compensation Committee

Robert H. Gidel, Chairman

Victor B. MacFarlane

Barry A. Sholem

William B. Summers, Jr.

CERTAIN TRANSACTIONS

Lease of Corporate Headquarters

      As a result of its rapid growth and expansion, the Company moved to a new headquarters in 1999. However, the Company continues to occupy 82.8% of its previous headquarters and to make payments required under the lease of its prior corporate headquarters in Moreland Hills, Ohio, which is leased from Mrs. Bert Wolstein, the mother of Mr. Wolstein. Annual rental payments aggregating $598,788 were made in 2004 by the Company; however, the Company subleased a portion of this space and, as a result, the Company received $140,633 in payments from third parties. Rental payments made by the Company under the lease include the payment of the Company’s pro rata portion of maintenance and insurance expenses, real estate taxes and operating expenses over a base year amount. The Company occupies the space pursuant to the terms of a lease which expires on December 31, 2009.

Service Merchandise Asset Designation Rights and Loan

      In March 2002, the Company announced its participation in a joint venture with Lubert-Adler Funds, of which Mr. Adler is a principal, and Klaff Realty, L.P. The joint venture was awarded asset designation rights for all of the retail real estate interests of the bankrupt estate of Service Merchandise Corporation for approximately $242 million. The Company has a 25% interest in the joint venture and Lubert-Adler Funds and Klaff Realty, L.P. have a combined 75% interest. The designation rights enable the joint venture to determine the ultimate use and disposition of the real estate interests held by the bankrupt estate. At December 31, 2004, the portfolio consisted of approximately 63 former Service Merchandise retail sites totaling approximately 3.4 million square feet of gross leasable area. The transaction was approved by the U.S. Bankruptcy Court in Nashville, Tennessee. In addition, the Company has a management agreement and performs certain administrative functions for the joint venture, for which it received $654,368 under the management agreement and $762,436 for leasing, development and disposition fees during 2004.

      In March 2002, DD Development Company II, Inc., a wholly-owned subsidiary of the Company, provided a construction loan to the joint venture in the amount of $7,717,130 and an interest rate of 10.0%. The largest amount of principal outstanding in 2004 was $13,627,610. DD Development Company II, Inc. received $1,220,230 in interest income from the loan in 2004.

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Settlement of Litigation

      The Company was a party to a lawsuit that involved various claims against the Company relating to certain management services provided by the Company. The owner of several properties had entered into a management agreement with W&Z Properties and Developers Diversified, Ltd., two entities controlled by Mr. Bert Wolstein, the late founder and former director of the Company, to provide management services. The Company agreed to perform those services on behalf of W&Z Properties and Developers Diversified, Ltd., and the fees payable by the owner of such properties to W&Z Properties and Developers Diversified, Ltd. were paid by the owner of the properties to the Company. One of the services which the owner of the properties claimed was to be provided by the Company was to obtain and maintain casualty insurance for the owner’s properties. A loss was incurred at one of the owner’s properties and the insurance company denied coverage. As a result of the denial of coverage, the Company filed a lawsuit against the insurance company. In January 2004, the Company entered into a settlement agreement with the owner of the properties pursuant to which the Company paid $750,000 to the owner of the properties, and agreed to indemnify W&Z Properties and Developers Diversified, Ltd. for any loss or damage incurred by either W&Z Properties or Developers Diversified, Ltd. if it were judicially determined that the owner of the property is not entitled to coverage under the policy.

      To facilitate the settlement, the Company entered into a management agreement with a joint venture, the members of which are Mr. Scott Wolstein, Chairman of the Board of Directors and Chief Executive Officer of the Company, and the principal of the owner of the properties, effective February 1, 2004. Mr. Wolstein holds an ownership interest of approximately 25.0% in the joint venture. The Company will provide management and administrative services and will receive fees equal to 3.0% of the gross income of each property for which services are provided, but not less than $5,000 per year from each such property. The management agreement expires on February 28, 2007, unless terminated earlier at any time by the joint venture upon 30 days’ notice to the Company or by the Company upon 60 days’ notice to the joint venture. During 2004, the Company received $75,318 in fees pursuant to this arrangement.

Judgment Entered Against the Company

      In September 2001, the United States District Court for the Northern District of Ohio entered a judgment in the amount of $5 million in compensatory damages and $4 million in punitive damages against the Company and three other defendants, in respect of a verdict reached in a civil trial regarding a claim filed by a movie theater relating to a property owned by the Company. The damages awarded against one of the defendants, Mr. Bert Wolstein, the late founder and former director of the Company, were subsequently reversed by the trial judge without challenge from the plaintiff, and Mr. Bert Wolstein was relieved from all liability. In April 2002, the Company appealed the remainder of the judgment.

      In February 2004, the appellate court denied the Company’s appeal of the judgment. The Company determined not to appeal the appellate court’s ruling, and the Company has paid the award. Based on the obligations assumed by the Company in connection with the acquisition of the property and the Company’s policy to indemnify officers and employees for actions taken during the course of company business, the judgment was not apportioned among the defendants. The other defendants include a former executive of the Company (who resigned in 1999) and a real estate development partnership owned by the former executive and Mr. Bert Wolstein. The property that is the subject of the litigation was acquired from the real estate development partnership in 1994. The lease negotiation was not finalized when the Company acquired the property.

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

      Section 16(a) of the Securities Exchange Act of 1934 requires the Company’s directors and executive officers, and owners of more than 10% of a registered class of the Company’s equity securities, to file with the Securities and Exchange Commission (the “SEC”) and the New York Stock Exchange initial reports of ownership and reports of changes in ownership of common shares and other equity securities of the Company. Executive officers, directors and owners of more than 10% of the common shares are required by SEC regulations to furnish the Company with copies of all forms they file pursuant to Section 16(a).

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      To the Company’s knowledge, based solely on review of the copies of such reports furnished to the Company and written representations that no other reports were required, during the fiscal year ended December 31, 2004, all Section 16(a) filing requirements applicable to its executive officers, directors and greater than 10% beneficial owners were complied with, except for a late report of an option exercise for Mr. Richard E. Brown, the Company’s Senior Vice President of Real Estate Operations, which was reported on an amended Form 4; and a late report on Form 3 for each of Messrs. Roulston and Summers and Dr. Anvari because of administrative delays in obtaining EDGAR filing codes.

SHAREHOLDER PROPOSALS FOR 2006 ANNUAL MEETING

      Any shareholder proposals intended to be presented at the Company’s 2006 Annual Meeting of Shareholders must be received by the Secretary of the Company at 3300 Enterprise Parkway, Beachwood, Ohio 44122, on or before December 5, 2005, for inclusion in the Company’s proxy statement and form of proxy relating to the 2006 Annual Meeting of Shareholders. As to any proposal that a shareholder intends to present to shareholders other than by inclusion in the Company’s proxy statement for the 2006 Annual Meeting of Shareholders, the proxies named in management’s proxy for that meeting will be entitled to exercise their discretionary voting authority on that proposal unless the Company receives notice of the matter to be proposed not later than February 18, 2006. Even if proper notice is received on or prior to February 18, 2006, the proxies named in the Company’s proxy for that meeting may nevertheless exercise their discretionary authority with respect to such matter by advising shareholders of that proposal and how they intend to exercise their discretion to vote on such matter, unless the shareholder making the proposal solicits proxies with respect to the proposal to the extent required by Rule 14a-4(c)(2) under the Securities Exchange Act of 1934, as amended.

HOUSEHOLDING

      The Securities and Exchange Commission permits a single set of annual reports and proxy statements to be sent to any household at which two or more shareholders reside if they appear to be members of the same family. Each shareholder continues to receive a separate proxy card. This procedure, referred to as householding, reduces the volume of duplicate information shareholders receive and reduces mailing and printing costs. A number of brokerage firms have instituted householding. Only one copy of this proxy statement and the attached annual report will be sent to certain beneficial shareholders who share a single address, unless any shareholder residing at that address gave contrary instructions.

      If any beneficiary shareholder residing at such an address desires at this time to receive a separate copy of this proxy statement and the attached annual report or if any such shareholder wishes to receive a separate proxy statement and annual report in the future, the shareholder should provide such instructions to the Company by calling Michelle M. Dawson, Vice President of Investor Relations, at (216) 755-5455, or by writing to Developers Diversified Realty Corporation, Investor Relations at 3300 Enterprise Parkway, Beachwood, Ohio 44122.

OTHER MATTERS

      Shareholders may send written communications to the Board of Directors by mailing them to the Board of Directors, c/o Investor Relations, Developers Diversified Realty Corporation, 3300 Enterprise Parkway, Beachwood, Ohio 44122. All communications will be forwarded to the Board of Directors.

      If the enclosed proxy is properly executed and returned to the Company, the persons named in it will vote the shares represented by such proxy at the meeting. A shareholder may specify a vote for the election of directors as set forth under “Election of Directors,” the withholding of authority to vote in the election of directors, or the withholding of authority to vote for one or more specified nominees.

      Where a choice has been specified in the proxy, the shares represented will be voted in accordance with such specification. If no specification is made, such shares will be voted to elect the director nominees listed in “Election of Directors.” Under Ohio law and the Company’s Amended and Restated Articles of Incorporation, as amended, broker non-votes and abstaining votes will not be counted in favor of or against any nominee for

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purposes of the election of the director nominees listed in “Election of Directors.” If you abstain from voting or your shares are held in “street name” by a broker or nominee indicating on a proxy that it does not have authority to vote on Proposal One, it will have the same effect as a vote against Proposal One. Due to recent rule changes by the New York Stock Exchange, if you do not provide instructions to your broker, it will have the same effect as a vote against Proposal Three. If any other matters shall properly come before the meeting, the persons named in the proxy will vote thereon in accordance with their judgment. Management does not know of any other matters which will be presented for action at the meeting.

By order of the Board of Directors,

Joan U. Allgood

Secretary

Dated: April 4, 2005

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DETACH CARD

DEVELOPERS DIVERSIFIED REALTY CORPORATION

This Proxy is Solicited on Behalf of the Board of Directors

The undersigned hereby appoints Joan U. Allgood and William H. Schafer, and each of them, the attorneys and proxies of the undersigned with full power of substitution to vote, as indicated herein, all the common shares of Developers Diversified Realty Corporation held of record by the undersigned on March 22, 2005, at the Annual Meeting of Shareholders to be held on May 10, 2005, or any adjournment thereof, with all the powers the undersigned would possess if then and there personally present. Receipt of Notice of Annual Meeting of Shareholders and the related Proxy Statement dated April 4, 2005 is hereby acknowledged.

PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED ENVELOPE.

Dated ____________, 2005

Signature(s) of Shareholder(s)

Please sign as your name appears hereon. If shares are held jointly, all holders must sign. When signing as attorney, executor, administrator, trustee or guardian, please give your full title. If a corporation, please sign in full corporate name by president or other authorized officer. If a partnership, please sign in partnership name by authorized person.

(Continued on reverse side)

DETACH CARE

(Continued from other side)

DEVELOPERS DIVERSIFIED REALTY CORPORATION PROXY

This proxy when properly executed will be voted as specified by the shareholder. If no specifications are made, the proxy will be voted to elect the nominees described in Item 2 and “FOR” the proposals in Items 1 and 3 below.

1. TO FIX THE NUMBER OF DIRECTORS AT TEN.

o  FOR    o  AGAINST    o   ABSTAIN

2. ELECTION OF DIRECTORS.

Nominees:  Dean S. Adler, Terrance R. Ahern, Mohsen Anvari, Robert H. Gidel, Victor B. MacFarlane, Craig Macnab, Scott D. Roulston, Barry A. Sholem, William B. Summers, Jr. and Scott A. Wolstein
	o  FOR all nominees listed above (except as marked to the contrary below)	o  WITHHOLD AUTHORITY to vote for all nominees listed above
	o  FOR the election of each of the nominees for Director listed above except:
(INSTRUCTION:  To withhold authority to vote for any individual nominee, write that nominee’s name in the space provided below)

3.  TO RATIFY THE SELECTION OF PRICEWATERHOUSECOOPERS LLP AS THE COMPANY’S INDEPENDENT ACCOUNTANTS FOR THE COMPANY’S FISCAL YEAR ENDING DECEMBER 31, 2005.

o  FOR    o  AGAINST    o   ABSTAIN

4.  In their discretion, to vote upon such other business as may properly come before the meeting.