UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 OR 15(d) of

The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported)    October 1, 2012

DDR Corp.

(Exact name of registrant as specified in its charter)

Ohio	1-11690	34-1723097
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

3300 Enterprise Parkway, Beachwood, Ohio	44122
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code    (216) 755-5500

Not Applicable

(Former name or former address, if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 8.01 Other Events

This Form 8-K updates the Annual Report on Form 10-K of DDR Corp. (the “Company”) for the year ended December 31, 2011, which was filed on February 28, 2012 and was amended on March 26, 2012 to amend Item 15 to include the separate financial statements of Sonae Sierra Brazil BV SARL, as required under Rule 3-09 of Regulation S-X (the Form 10-K as previously amended, the “Original Report”).

This Form 8-K reflects the impact of the classification of discontinued operations of properties sold after January 1, 2012, pursuant to the requirements of Accounting Standards Codification No. 360, Property, Plant, and Equipment (“ASC 360”), for the five years ended December 31, 2011. During the period January 1, 2012 to June 30, 2012, the Company disposed of 17 shopping center properties and four office properties and had one property held for sale at June 30, 2012, aggregating 2.7 million square feet. In compliance with ASC 360, the Company has reported revenues, expenses and losses and/or gains on the disposition of these properties as income (loss) from discontinued operations for each period presented in the Company’s quarterly report or quarterly reports on Form 10-Q filed since the properties were disposed of (including the comparable period of the prior year). The same retrospective adjustment of discontinued operations required by ASC 360 is required for previously issued annual financial statements if those financial statements are incorporated by reference in subsequent filings with the Securities and Exchange Commission under the Securities Act of 1933 even though those financial statements related to periods prior to the date of the sale.

Accordingly, the Company has reflected these retrospective adjustments in the following portions of the Original Report: Item 6 — Selected Financial Data, Item 7 — Management’s Discussion and Analysis of Financial Condition and Results of Operations, Item 8 — Financial Statements and Supplementary Data (including the Company’s Consolidated Financial Statements for the years ended December 31, 2011, 2010 and 2009, Notes to the Consolidated Financial Statements and the Report of Independent Registered Public Accounting Firm) and has reissued the Company’s Consolidated Financial Statements for the three years ended December 31, 2011, 2010 and 2009.

All other items of the Original Report remain unchanged, and no attempt has been made to update matters in the Original Report, except to the extent expressly provided above. Refer to the Company’s quarterly reports on Form 10-Q for periods subsequent to December 31, 2011.

Item 9.01 Financial Statements and Exhibits

(d) Exhibits.

Exhibit No.	Description
23	Consent of PricewaterhouseCoopers LLC
101.INS	XBRL Instance Document1
101.SCH	XBRL Taxonomy Extension Schema Document1
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document1
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document1
101.LAB	XBRL Taxonomy Extension Label Linkbase Document1
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document1

¹ Submitted electronically herewith.

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

Item 6.    SELECTED FINANCIAL DATA

The consolidated financial data included in the following table has been derived from the financial statements for the last five years and includes the information required by Item 301 of Regulation S-K. The following selected consolidated financial data should be read in conjunction with the Company’s consolidated financial statements and related notes and “Item 7 — Management’s Discussion and Analysis of Financial Condition and Results of Operations.” All consolidated financial data has been restated, as appropriate, to reflect the impact of activity classified as discontinued operations for all periods presented.

COMPARATIVE SUMMARY OF SELECTED FINANCIAL DATA

(Amounts in thousands, except per share data)

	For the Year Ended December 31,
	2011			2010			2009			2008			2007
Operating Data:
Revenues	$	753,933		$	746,362		$	738,582		$	759,662		$	761,117
Expenses:
Rental operations		228,004			223,809			214,071			202,848			191,940
Impairment charges		67,912			84,855			12,245			16,021			—
General and administrative		85,221			85,573			94,365			97,719			81,244
Depreciation and amortization		216,820			203,825			194,311			184,912			164,196
		597,957			598,062			514,992			501,500			437,380
Interest income		9,832			7,302			11,966			5,218			8,551
Interest expense		(225,113	)		(210,587	)		(206,890	)		(214,010	)		(224,885	)
(Loss) gain on debt retirement, net		(89	)		485			145,050			10,455			—
Gain (loss) on equity derivative instruments		21,926			(40,157	)		(199,797	)		—			—
Other (expense) income, net		(5,002	)		(24,156	)		(28,894	)		(27,602	)		(3,097	)
		(198,446	)		(267,113	)		(278,565	)		(225,939	)		(219,431	)
(Loss) income before earnings from equity method investments and other items		(42,470	)		(118,813	)		(54,975	)		32,223			104,306
Equity in net income (loss) of joint ventures		13,734			5,600			(9,733	)		17,719			43,229
Impairment of joint venture investments		(2,921	)		(227	)		(184,584	)		(106,957	)		—
Gain on change in control of interests and sale of interests		25,170			—			23,865			—			—
Tax (expense) benefit of taxable REIT subsidiaries and state franchise and income taxes		(1,028	)		(47,945	)		890			17,627			14,916
(Loss) income from continuing operations		(7,515	)		(161,385	)		(224,537	)		(39,388	)		162,451

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	For the Year Ended December 31,
	2011			2010			2009			2008			2007
(Loss) income from discontinued operations		(18,961	)		(87,654	)		(188,230	)		(50,643	)		51,346
(Loss) income before gain on disposition of real estate		(26,476	)		(249,039	)		(412,767	)		(90,031	)		213,797
Gain on disposition of real estate, net of tax		7,079			1,318			9,127			6,962			68,851
Net (loss) income	$	(19,397	)	$	(247,721	)	$	(403,640	)	$	(83,069	)	$	282,648
Non-controlling interests		3,543			38,363			47,047			11,139			(17,706	)
Net (loss) income attributable to DDR	$	(15,854	)	$	(209,358	)	$	(356,593	)	$	(71,930	)	$	264,942
(Loss) earnings per share data — Basic:
(Loss) income from continuing operations attributable to DDR common shareholders	$	(0.13	)	$	(0.78	)	$	(1.63	)	$	(0.64	)	$	1.38
(Loss) income from discontinued operations attributable to DDR common shareholders		(0.07	)		(0.25	)		(0.88	)		(0.32	)		0.38
Net (loss) income attributable to DDR common shareholders	$	(0.20	)	$	(1.03	)	$	(2.51	)	$	(0.96	)	$	1.76
Weighted-average number of common shares		270,278			244,712			158,816			119,843			120,879
(Loss) earnings per share data — Diluted:
(Loss) income from continuing operations attributable to DDR common shareholders	$	(0.21	)	$	(0.78	)	$	(1.63	)	$	(0.64	)	$	1.37
(Loss) income from discontinued operations attributable to DDR common shareholders		(0.07	)		(0.25	)		(0.88	)		(0.32	)		0.38
Net (loss) income attributable to DDR common shareholders	$	(0.28	)	$	(1.03	)	$	(2.51	)	$	(0.96	)	$	1.75
Weighted-average number of common shares		271,472			244,712			158,816			119,843			121,335
Dividends declared	$	0.22		$	0.08		$	0.44		$	2.07		$	2.64

	At December 31,(A)
	2011		2010		2009		2008		2007
Balance Sheet Data:
Real estate (at cost)	$	8,270,106	$	8,411,239	$	8,823,719	$	9,109,566	$	8,985,749
Real estate, net of accumulated depreciation		6,719,063		6,959,127		7,490,403		7,900,663		7,961,701
Investments in and advances to joint ventures		353,907		417,223		420,541		583,767		638,111
Total assets		7,469,425		7,768,090		8,426,606		9,020,222		9,089,514
Total debt		4,104,584		4,302,000		5,178,663		5,866,655		5,523,953
Equity		3,077,892		3,134,687		2,952,336		2,864,794		3,193,302

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	For the Year Ended December 31,(A)
	2011			2010			2009			2008			2007
Cash Flow Data:
Cash flow provided by (used for):
Operating activities	$	273,195		$	278,124		$	228,935		$	391,941		$	420,667
Investing activities		200,696			31,762			150,884			(468,572	)		(1,162,287	)
Financing activities		(451,854	)		(317,065	)		(381,348	)		56,296			763,411

(A) As described in the consolidated financial statements, the Company and its unconsolidated joint ventures completed the following property acquisitions and dispositions for the periods presented. Dispositions in 2011 and 2010 also include assets for which control has been relinquished and the Company does not have any further significant economic interest.

	Property Acquisitions				Property Dispositions
Year	Consolidated		Unconsolidated Joint Ventures		Consolidated		Unconsolidated Joint Ventures
2011		6		—		35		11
2010		—		—		56		37
2009		4		—		34		12
2008		—		11		22		—
2007		249		68		67		7

During the period January 1, 2012 to June 30, 2012, the Company disposed of 21 consolidated properties and four unconsolidated joint venture properties. These properties are reflected as discontinued operations in the periods presented.

In 2007, 315 shopping centers were acquired through the merger with Inland Retail Real Estate Trust, Inc. (“IRRETI”), of which 66 were held by an unconsolidated joint venture of IRRETI.

Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Executive Summary

The Company is a self-administered and self-managed Real Estate Investment Trust (“REIT”) in the business of owning, managing and developing a portfolio of shopping centers. As of December 31, 2011, the Company’s portfolio consisted of 432 shopping centers (including 177 shopping centers owned through unconsolidated joint ventures and two shopping centers that are otherwise consolidated by the Company) in which the Company had an economic interest and five office properties. These properties consist of shopping centers, lifestyle centers and enclosed malls owned in the United States, Puerto Rico and Brazil. At December 31, 2011, the Company owned and/or managed more than 122.8 million total square feet of gross leasable area (“GLA”), which includes all of the aforementioned properties and 49 properties managed by the Company (46 of these properties are expected to be acquired by the Company through a 5% common interest in an unconsolidated joint venture in 2012). These amounts do not include 42 assets in which the Company did not have an economic interest and, effective as of January 1, 2012, the Company did not manage. The Company also owns more than 1,600 acres of undeveloped land, including an interest in land in Canada and Russia. At December 31, 2011, the aggregate occupancy of the Company’s operating shopping center portfolio in which the Company has an economic interest was 89.1%, as compared to 88.4% at December 31, 2010. The Company owned 478 shopping centers and six office properties at December 31, 2010. The average annualized base rent per occupied square foot was $13.81 at December 31, 2011, as compared to $13.30 at December 31, 2010.

Current Strategy

The Company seeks to continue to decrease leverage and focus on operational efficiencies in order to improve its risk profile, portfolio quality and property-level operating results. The Company expects to decrease

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leverage and improve liquidity through retained cash flow enhanced by incremental leasing, new financings, asset sales and other means.

The Company’s portfolio and asset class have demonstrated limited volatility during prior economic downturns and continue to generate relatively consistent cash flows. The following set of core competencies is expected to continue to benefit the Company:

• Strong tenant relationships with the nation’s leading retailers, maintained through a national tenant account program;

• A retail partnerships group to optimize portfolio management by enhancing communication between retailers, the leasing department and other areas of the Company;

• An internal anchor store redevelopment department solely dedicated to aggressively identifying opportunities to re-tenant vacant anchor space created by retailer bankruptcies and store closings;

• An investment group focused on selectively acquiring well-located, quality shopping centers that have leases at rental rates below market rates or other cash flow growth or capital appreciation potential where the Company’s financial strength, relationships with retailers and management capabilities can enhance value;

• An ancillary income department generating revenue with a low investment and/or creating cash flow streams from empty or underused space;

• A focus on growth and value creation within the prime portfolio, from which approximately 89% of the Company’s net operating income (defined as property-level revenues less property-level operating expenses) is generated. The prime portfolio (“Prime Portfolio”) consists of market-dominant shopping centers with high-quality tenants located in attractive markets with strong demographic profiles;

• A redevelopment department focused on identifying viable projects with attractive returns;

• A capital markets department with broad and diverse relationships with capital providers to facilitate access to secured, unsecured, public and private capital;

• An experienced funds management team dedicated to generating consistent returns and disclosure for institutional partners;

• A focused asset transaction team dedicated to finding buyers for non-core assets and sourcing potential acquisition opportunities; and

• A development department adhering to disciplined standards for development.

Balance Sheet

The Company took the following steps in 2011 to reduce leverage and enhance financial flexibility:

• Amended its two senior unsecured revolving credit facilities, including the extension of the term of each to February 2016;

• Refinanced a $550.0 million senior secured term loan that was scheduled to mature in February 2012 with a new $500.0 million senior secured term loan with an initial maturity of September 2014 with a one-year extension option;

• Completed $269.3 million of acquisitions of prime shopping centers and $460.9 million of asset dispositions. DDR’s share of 2011 acquisitions was $229.5 million. DDR’s share of 2011 dispositions was $371.5 million, including the sale of $56.9 million of non-income producing assets;

• Issued $300.0 million aggregate principal amount of 4.75%, seven-year senior unsecured notes;

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• Raised $190.2 million of equity proceeds from the issuance of 9.5 million common shares and the issuance of 10.0 million common shares from the exercise of warrants, the proceeds of which were used to redeem $180.0 million of 8.0% Class G cumulative redeemable preferred shares;

• Reduced consolidated debt from $4.3 billion to $4.1 billion, and extended the weighted-average maturity of consolidated debt from 3.9 years to 4.3 years; and

• Paid cash dividends of $0.22 per common share as compared to $0.08 per common share, an increase of 175% from 2010.

Operational Accomplishments

The Company accomplished the following in 2011 to improve cash flow and the quality of its portfolio:

• Increased the portfolio occupancy rate to 89.1% at year-end 2011 from 88.4% at year-end 2010;

• Executed 876 new leases and 1,232 renewals for over 11.7 million square feet of GLA including managed assets;

• Increased total portfolio average annualized base rent per occupied square foot by approximately 3.8% to $13.81 at December 31, 2011, from December 31, 2010;

• Increased consolidated and joint venture ancillary income by approximately 23.6% in 2011 to approximately $53.6 million; and

• Eliminated through the disposition of non-prime assets over $1.1 million of net operating losses from non-income-producing assets.

Retail Environment

Although, the retail market in the United States continued to be challenged throughout 2011 by high unemployment and slow consumer spending, retailers continued to open stores to maintain or even increase market share. The Company believes retailers are looking to open new stores to meet their projected strong demand in 2012 and 2013. Retailers have become more flexible with their design and prototype requirements, in some cases reducing square footage (retailer downsizing). Downsizing of junior anchors can present opportunities for landlords that can use their operational expertise to generate higher rents through new tenants and small shop consolidation efforts. The Company has been proactive in capitalizing on such opportunities.

Due to continued consumer cautiousness, retailers that specialize in low-cost necessity goods and services are taking market share from high-end discretionary retailers that dominate the mall portfolios. The Company’s largest tenants, including Walmart/Sam’s Club, Target, T.J. Maxx/Marshalls and Kohl’s, appeal to value-oriented consumers, remain well-capitalized and have outperformed other retail categories on a relative basis. Additionally, several retailers have been able to access capital this past year through equity and debt offerings, which the Company believes was a positive development for the retail industry.

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Company Fundamentals

The following table lists the Company’s 10 largest tenants based on total annualized rental revenues and Company-owned GLA of the wholly-owned properties and the Company’s proportionate share of unconsolidated joint venture properties combined as of December 31, 2011:

Tenant		% of Total Shopping Center Base Rental Revenues			% of Company- Owned Shopping Center GLA
1.	Walmart/Sam’s Club		4.3	%		7.3	%
2.	T.J. Maxx/Marshalls/Homegoods		2.4	%		2.6	%
3.	PetSmart		2.2	%		1.7	%
4.	Bed, Bath & Beyond		2.0	%		1.8	%
5.	Kohl’s		1.8	%		2.7	%
6.	Michaels		1.6	%		1.5	%
7.	Lowe’s		1.5	%		2.6	%
8.	OfficeMax		1.3	%		1.2	%
9.	Best Buy		1.3	%		1.1	%
10.	Dick’s Sporting Goods		1.2	%		1.3	%

The following table lists the Company’s 10 largest tenants based on total annualized rental revenues and Company-owned GLA of the wholly-owned properties and of the unconsolidated joint venture properties as of December 31, 2011:

	Wholly-Owned Properties						Joint Venture Properties
Tenant	% of Shopping Center Base Rental Revenues			% of Company- Owned Shopping Center GLA			% of Shopping Center Base Rental Revenues			% of Company- Owned Shopping Center GLA
Walmart/Sam’s Club		4.9	%		8.0	%		1.3	%		2.5	%
T.J. Maxx/Marshalls/Homegoods		2.6	%		2.7	%		1.4	%		2.1	%
PetSmart		2.4	%		1.8	%		1.5	%		1.5	%
Bed, Bath & Beyond		2.2	%		1.8	%		1.3	%		1.8	%
Kohl’s		1.9	%		2.7	%		1.4	%		2.6	%
Lowe’s		1.8	%		3.0	%		0.1	%		0.3	%
Michaels		1.7	%		1.5	%		1.4	%		1.6	%
OfficeMax		1.5	%		1.2	%		0.6	%		0.9	%
Best Buy		1.4	%		1.1	%		1.0	%		1.0	%
Rite Aid		1.3	%		0.6	%		0.1	%		0.1	%
Publix Supermarkets		0.3	%		0.3	%		3.0	%		4.7	%
AMC Theaters		0.7	%		0.2	%		2.1	%		1.8	%
Ross Dress for Less		1.0	%		1.1	%		1.6	%		2.3	%
Kroger		0.9	%		1.1	%		1.5	%		3.1	%
Gap		1.2	%		0.9	%		1.2	%		1.2	%

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The Company’s portfolio exhibited favorable rent growth from retailers signing new leases and adhering to their store-opening plans for the year. The Company has consistently increased total portfolio average annualized base rent per occupied square foot over the past two years including an approximate 3.8% increase in 2011 as compared to 2010.

The Company’s innovative ancillary income platform produces value and mitigates risk. This program seeks to create cash flow streams from empty or underused space with a low cost of investment for the Company. The growth in ancillary income for the Company’s portfolio is reflected below:

The Company believes its value-oriented shopping center format is ideal for keeping maintenance costs and capital expenditures low while maintaining an attractive, high-quality retail environment. The Company believes its capital expenditures as a percentage of net operating income are low relative to its industry peers. The Company’s low capital expenditures contribute to a strong organic growth rate.

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Year in Review — 2011

For the year ended December 31, 2011, the Company recorded net loss attributable to common shareholders of $53.8 million, or $0.28 per share (diluted), compared to net loss attributable to common shareholders of $251.6 million, or $1.03 per share (diluted), in the prior year. Funds From Operations applicable to common shareholders (“FFO”) for the year ended December 31, 2011, was $227.6 million compared to $76.3 million for the year ended December 31, 2010. The decrease in reported loss and increase in FFO applicable to common shareholders for the year ended December 31, 2011, is primarily the result of the gain on change in control and sale of interests related to the Company’s unconsolidated joint ventures; a reduction in impairment charges recorded on non-depreciable assets (land); lower income tax expense; and the effect of the valuation adjustments associated with the warrants, partially offset by executive separation charges and the write-off of the original issuance costs from the redemption of the Company’s Class G cumulative redeemable preferred shares.

During 2011, the Company focused on its core competencies and internal portfolio growth through increasing occupancy and rental rates and decreasing capital expenditures. These core competencies include the Company’s stable relationships with national tenants and the investment community, maintained by strong internal leasing, management and investment teams. The Company continued making progress on its balance sheet initiatives; strengthening the operations of its Prime Portfolio, including selling non-prime assets; and maintaining the strength and depth of the management team.

The Company continued its improvement in operating performance in 2011 as evidenced by the number of leases executed during the year and the continued upward trend in average rental rates. The Company leased over 11.7 million square feet in 2011 including managed assets. The Company believes first-year rents on new leases provide a solid indicator of leasing trends, and the average first-year rent for all new leases executed in 2011 was $15.61 per square foot. The Company increased its total portfolio average annualized base rent per square foot by approximately 3.8% in 2011 as compared to 2010. This growth was achieved without increasing the Company’s historically low tenant capital expenditures. The weighted-average cost of tenant improvements and lease commissions estimated to be incurred for leases executed during the year was only $2.62 per rentable square foot over the lease term.

As a result of the activity described above, the Company continued to execute its long-term balance sheet initiatives to reduce leverage, extend debt maturities and improve overall liquidity, resulting in greater financial flexibility and a more competitive cost of capital. The Company decreased its total consolidated outstanding indebtedness nearly $0.2 billion to $4.1 billion and extended debt maturities through the amendment of credit facilities and term loans, the issuance of unsecured debt and the issuance of equity as discussed above.

In addition, the Company’s unconsolidated joint venture in Brazil completed an initial public offering raising approximately US$280 million of gross proceeds, which were generally retained within the venture to invest in future growth opportunities.

In 2011, the Company acquired six prime shopping centers for an aggregate purchase price of approximately $269.3 million. The Company also sold assets, including non-income-producing assets, generating gross proceeds of approximately $460.9 million (of which the Company’s share was approximately $371.5 million). This activity demonstrates the Company’s strategy to recycle capital from non-prime asset sales into the acquisitions of Prime Assets (market-dominant shopping centers with high quality tenants located in attractive markets with strong demographic profiles) to improve portfolio quality. The Company continues to carefully consider opportunities that fit its selective acquisition requirements and is committed to remaining prudent in its underwriting and bidding practices.

The Company increased its dividend on its common shares to $0.08 per common share in the fourth quarter of 2011 from $0.06 per common share in the third quarter of 2011 and $0.04 in the first and second quarters of 2011. The continued increases allowed the Company to retain free cash flow, while reflecting the Company’s execution on its long-term strategies.

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In 2011, the Company continued its focus on maximizing internal growth opportunities while taking a balanced approach to external growth with a consistent execution of its previously established strategic objectives.

CRITICAL ACCOUNTING POLICIES

The consolidated financial statements of the Company include the accounts of the Company and all subsidiaries where the Company has financial or operating control. The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions in certain circumstances that affect amounts reported in the accompanying consolidated financial statements and related notes. In preparing these financial statements, management has used available information, including the Company’s history, industry standards and the current economic environment, among other factors, in forming its estimates and judgments of certain amounts included in the consolidated financial statements, giving due consideration to materiality. It is possible that the ultimate outcome as anticipated by management in formulating its estimates inherent in these financial statements might not materialize. Application of the critical accounting policies described below involves the exercise of judgment and the use of assumptions as to future uncertainties. As a result, actual results could differ from these estimates. In addition, other companies may use different estimates that may affect the comparability of the Company’s results of operations to those of companies in similar businesses.

Revenue Recognition and Accounts Receivable

Rental revenue is recognized on a straight-line basis that averages minimum rents over the current term of the leases. Certain of these leases provide for percentage and overage rents based upon the level of sales achieved by the tenant. Percentage and overage rents are recognized after a tenant’s reported sales have exceeded the applicable sales breakpoint set forth in the applicable lease. The leases also typically provide for tenant reimbursements of common area maintenance and other operating expenses and real estate taxes. Accordingly, revenues associated with tenant reimbursements are recognized in the period in which the expenses are incurred based upon the tenant lease provision. Management fees are recorded in the period earned. Fee income derived from the Company’s unconsolidated joint venture investments is recognized to the extent attributable to the unaffiliated ownership interest. Ancillary and other property-related income, which includes the leasing of vacant space to temporary tenants, is recognized in the period earned. Lease termination fees are included in other revenue and recognized and earned upon termination of a tenant’s lease and relinquishment of space in which the Company has no further obligation to the tenant.

The Company makes estimates of the collectability of its accounts receivable related to base rents, including straight-line rentals, expense reimbursements and other revenue or income. The Company specifically analyzes accounts receivable and analyzes historical bad debts, customer credit worthiness, current economic trends and changes in customer payment patterns when evaluating the adequacy of the allowance for doubtful accounts. In addition, with respect to tenants in bankruptcy, the Company makes estimates of the expected recovery of pre-petition and post-petition claims in assessing the estimated collectability of the related receivable. The time to resolve these claims may exceed one year. These estimates have a direct impact on the Company’s earnings because a higher bad debt reserve and/or a subsequent write-off in excess of an estimated reserve results in reduced earnings.

Notes Receivable

Notes receivable include certain loans that are held for investment and are generally collateralized by real estate-related investments and may be subordinate to other senior loans. Loan receivables are recorded at stated principal amounts or at initial investment plus accretable yield for loans purchased at a discount. The related discounts on mortgages and other loans purchased are accreted over the life of the related loan receivable. The

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Company defers loan origination and commitment fees, net of origination costs, and amortizes them over the term of the related loan. The Company considers notes receivable to be past-due or delinquent when a contractually required principal or interest payment is not remitted in accordance with the provisions of the underlying agreement. The Company evaluates the collectability of both interest and principal on each loan based on an assessment of the underlying collateral to determine whether it is impaired, and not by the use of internal risk ratings. A loan is considered to be impaired when, based upon current information and events, it is probable that the Company will be unable to collect all amounts due according to the existing contractual terms, and the amount of loss can be reasonably estimated. When a loan is considered to be impaired, the amount of loss is calculated by comparing the recorded investment to the value of the underlying collateral. As the underlying collateral for a majority of the notes receivable are real estate-related investments, the same valuation techniques are used to value the collateral as those used to determine the fair value of real estate investments for impairment purposes. Given the small number of loans, the Company does not provide for an additional allowance for loan losses based on the grouping of loans, as the Company believes the characteristics of the loans are not sufficiently similar to allow an evaluation of these loans as a group for a possible loan loss allowance. As such, all of the Company’s loans are evaluated individually for this purpose. Interest income on performing loans is accrued as earned. A loan is placed on non-accrual status when, based upon current information and events, it is probable that the Company will not be able to collect all amounts due according to the existing contractual terms. Interest income on non-performing loans is generally recognized on a cash basis. Recognition of interest income on non-performing loans on an accrual basis is resumed when it is probable that the Company will be able to collect amounts due according to the contractual terms.

Consolidation

The Company has a number of joint venture arrangements with varying structures. The Company consolidates entities in which it owns less than a 100% equity interest if it is determined that it is a variable interest entity (“VIE”) and the Company has a controlling financial interest in that VIE, or is the controlling general partner. The analysis to identify whether the Company is the primary beneficiary of a VIE is based upon which party has (a) the power to direct activities of the VIE that most significantly affect the VIE’s economic performance and (b) the obligation to absorb losses or the right to receive benefits that could potentially be significant to the VIE. In determining whether it has the power to direct the activities of the VIE that most significantly affect the VIE’s performance, the Company is required to assess whether it has an implicit financial responsibility to ensure that a VIE operates as designed. This qualitative assessment has a direct impact on the Company’s financial statements, as the detailed activity of off-balance sheet joint ventures is not presented within the Company’s consolidated financial statements.

Further, under its consolidation policy, the Company believes that it no longer has the contractual ability to direct the activities that most significantly affect the economic performance of entities that have been transferred to the control of a court-appointed receiver (“Receivership”). The Company’s accounting policy for evaluating Receivership transactions is based upon Accounting Standards Codification (“ASC”) No. 810, Consolidation (“ASC 810”), whereas diversity in practice exists and whereby others may apply the provisions of ASC 360-20, Property, Plant, and Equipment — Real Estate Sales (“Alternative View”). Under the Alternative View, the Company would likely not record a gain (or loss) upon deconsolidation and would continue to consolidate the entity (and its assets and non-recourse liabilities) until it legally transferred the title of the underlying assets and was relieved of its obligations. The Emerging Issues Task Force (“EITF”) of the FASB discussed this type of transaction and reached a final consensus that the real estate sales guidance should govern. This issue was ratified by the FASB in 2011, and the new guidance will be effective prospectively for fiscal years beginning on or after June 15, 2012. The Company will apply this consensus on a prospective basis on the effective date (see New Accounting Standards).

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Real Estate and Long-Lived Assets

Properties are depreciated using the straight-line method over the estimated useful lives of the assets. The Company is required to make subjective assessments as to the useful lives of its properties to determine the amount of depreciation to reflect on an annual basis with respect to those properties. These assessments have a direct impact on the Company’s net income. If the Company would change the expected useful life of a particular asset, it would be depreciated over more years and result in less depreciation expense and higher annual net income.

On a periodic basis, management assesses whether there are any indicators that the value of real estate assets, including land held for development and construction in progress, and intangible assets may be impaired. A property’s value is impaired only if management’s estimate of the aggregate future cash flows (undiscounted and without interest charges) to be generated by the property are less than the carrying value of the property. The determination of undiscounted cash flows requires significant estimates by management. In management’s estimate of cash flows, it considers factors such as expected future operating income (loss), trends and prospects, the effects of demand, competition and other factors. If the Company is evaluating the potential sale of an asset or development alternatives, the undiscounted future cash flows analysis is probability-weighted based upon management’s best estimate of the likelihood of the alternative courses of action. Subsequent changes in estimated undiscounted cash flows arising from changes in anticipated actions could affect the determination of whether an impairment exists and whether the effects could have a material impact on the Company’s net income. To the extent an impairment has occurred, the loss will be measured as the excess of the carrying amount of the property over the fair value of the property.

The Company is required to make subjective assessments as to whether there are impairments in the value of its real estate properties and other investments. These assessments have a direct impact on the Company’s net income because recording an impairment charge results in an immediate negative adjustment to net income.

The Company allocates the purchase price to assets acquired and liabilities assumed at the date of acquisition. In estimating the fair value of the tangible and intangible assets and liabilities acquired, the Company considers information obtained about each property as a result of its due diligence, marketing and leasing activities. It applies various valuation methods, such as estimated cash flow projections using appropriate discount and capitalization rates, estimates of replacement costs net of depreciation and available market information. If the Company determines that an event has occurred after the initial allocation of the asset or liability that would change the estimated useful life of the asset, the Company will reassess the depreciation and amortization of the asset. The Company is required to make subjective estimates in connection with these valuations and allocations.

Off-Balance sheet Arrangements — Impairment Assessment

The Company has a number of off-balance sheet joint ventures and other unconsolidated arrangements with varying structures. On a periodic basis, management assesses whether there are any indicators that the value of the Company’s investments in unconsolidated joint ventures may be impaired. An investment’s value is impaired only if management’s estimate of the fair value of the investment is less than the carrying value of the investment and such loss is deemed to be other than temporary. To the extent an impairment has occurred, the loss is measured as the excess of the carrying amount of the investment over the estimated fair value of the investment.

Measurement of Fair Value — Real Estate and Unconsolidated Joint Venture Investments

The Company is required to assess the value of certain impaired consolidated and unconsolidated joint venture investments as well as the underlying collateral for certain financing notes receivable. The fair value of real estate investments used in the Company’s impairment calculations is estimated based on the price that would be received to sell an asset in an orderly transaction between marketplace participants at the measurement date. Investments without a public market are valued based on assumptions made and valuation techniques used by the Company. The availability of observable transaction data and inputs can make it more difficult and/or subjective to determine the fair value of such investments. As a result, amounts ultimately realized by the Company from investments sold may differ from the fair values presented, and the differences could be material.

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The valuation of impaired real estate assets, investments and real estate collateral is determined using widely accepted valuation techniques including the income capitalization approach or discounted cash flow analysis on the expected cash flows of each asset considering prevailing market capitalization rates, analysis of recent comparable sales transactions, actual sales negotiations, bona fide purchase offers received from third parties and/or consideration of the amount that currently would be required to replace the asset, as adjusted for obsolescence. In general, the Company considers multiple valuation techniques when measuring fair value of an investment. However, in certain circumstances, a single valuation technique may be appropriate.

For operational real estate assets, the significant assumptions include the capitalization rate used in the income capitalization valuation as well as the projected property net operating income and expected hold period. For projects under development, the significant assumptions include the discount rate, the timing for the construction completion and project stabilization and the exit capitalization rate. For investments in unconsolidated joint ventures, the Company also considers the valuation of any underlying joint venture debt. Valuation of real estate assets is calculated based on market conditions and assumptions made by management at the measurement date, which may differ materially from actual results if market conditions or the underlying assumptions change.

Real Estate Held for Sale

Pursuant to the definition of a component of an entity, assuming no significant continuing involvement, the sale of a property is considered discontinued operations. In addition, the operations from properties classified as held for sale are considered a discontinued operation. The Company generally considers assets to be held for sale when the transaction has been approved by the appropriate level of management and there are no known significant contingencies relating to the sale such that the sale of the property within one year is considered probable. This generally occurs when a sales contract is executed with no contingencies and the prospective buyer has significant funds at risk to ensure performance. Accordingly, the results of operations of operating properties disposed of or classified as held for sale, for which the Company has no significant continuing involvement, are reflected in the current period and retrospectively as discontinued operations.

Deferred Tax Assets and Tax Liabilities

The Company accounts for income taxes related to its taxable REIT subsidiary under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements. The Company records net deferred tax assets to the extent it believes it is more likely than not that these assets will be realized. In making such determination, the Company considers all available positive and negative evidence, including forecasts of future taxable income, the reversal of other existing temporary differences, available net operating loss carryforwards, tax planning strategies and recent results of operations. Several of these considerations require assumptions and significant judgment about the forecasts of future taxable income and are consistent with the plans and estimates that the Company is utilizing to manage the Company. Based on this assessment, management must evaluate the need for, and amount of, valuation allowances against the Company’s deferred tax assets. The Company would record a valuation allowance to reduce deferred tax assets when it has determined that an uncertainty exists regarding their realizability, which would increase the provision for income taxes. To the extent facts and circumstances change in the future, adjustments to the valuation allowances may be required. In the event the Company were to determine that it would be able to realize the deferred income tax assets in the future in excess of their net recorded amount, the Company would adjust the valuation allowance, which would reduce the provision for income taxes. The Company makes certain estimates in the determination of the use of valuation reserves recorded for deferred tax assets. These estimates could have a direct impact on the Company’s earnings, as a difference in the tax provision would impact the Company’s earnings.

The Company has made estimates in assessing the impact of the uncertainty of income taxes. Accounting standards prescribe a recognition threshold and measurement attribute criteria for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. The standards also

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provide guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. These estimates have a direct impact on the Company’s net income because higher tax expense will result in reduced earnings.

Accrued Liabilities

The Company makes certain estimates for accrued liabilities and litigation reserves. These estimates are subjective and based on historical payments, executed agreements, anticipated trends and representations from service providers. These estimates are prepared based on information available at each balance sheet date and are reevaluated upon the receipt of any additional information. Many of these estimates are for payments that occur within one year. These estimates have a direct impact on the Company’s net income because a higher accrual will result in reduced earnings.

Stock-Based Employee Compensation

Stock-based compensation requires all stock-based payments to employees, including grants of stock options, to be recognized in the financial statements based on their fair value. The fair value is estimated at the date of grant using a Black-Scholes option pricing model with weighted-average assumptions for the activity under stock plans. Option pricing model input assumptions, such as expected volatility, expected term and risk-free interest rate, make an impact on the fair value estimate. Further, the forfeiture rate makes an impact on the amount of aggregate compensation. These assumptions are subjective and generally require significant analysis and judgment to develop.

When estimating fair value, some of the assumptions will be based on or determined from external data, and other assumptions may be derived from experience with stock-based payment arrangements. The appropriate weight to place on experience is a matter of judgment, based on relevant facts and circumstances.

COMPARISON OF 2011 TO 2010 RESULTS OF OPERATIONS

Continuing Operations

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

Revenues from Operations (in thousands)

	2011		2010		$ Change			% Change
Base and percentage rental revenues(A)	$	507,305	$	498,901	$	8,404			1.7	%
Recoveries from tenants(B)		163,879		162,921		958			0.6
Fee and other income(C)		82,749		84,540		(1,791	)		(2.1	)
Total revenues	$	753,933	$	746,362	$	7,571			1.0	%

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

	Increase (Decrease)
Comparable Portfolio Properties	$	4.3
Acquisition of shopping centers		7.7
Development/redevelopment of shopping center properties		(1.7	)
Office properties		(0.2	)
Straight-line rents		(1.7	)
	$	8.4

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The following tables present the statistics for the Company’s operating shopping center portfolio (in which the Company has an economic interest) affecting base and percentage rental revenues summarized by the following portfolios: combined shopping center portfolio, office property portfolio, wholly-owned shopping center portfolio and joint venture shopping center portfolio:

	Shopping Center Portfolio(1) December 31,						Office Property Portfolio December 31,
	2011			2010			2011			2010
Centers owned		432			478			5			6
Aggregate occupancy rate		89.1	%		88.4	%		83.6	%		80.7	%
Average annualized base rent per occupied square foot	$	13.81		$	13.30		$	12.12		$	11.05

	Wholly-Owned Shopping Centers December 31,						Joint Venture Shopping Centers(1) December 31,
	2011			2010			2011			2010
Centers owned		253			286			177			189
Centers owned through Consolidated joint ventures		n/a			n/a			2			3
Aggregate occupancy rate		88.8	%		88.6	%		89.5	%		88.1	%
Average annualized base rent per occupied square foot	$	12.26		$	12.23		$	15.93		$	14.66

⁽¹⁾  Excludes shopping centers owned by unconsolidated joint ventures in which the Company’s investment basis is zero and is receiving no allocation of income or loss.

(B) Recoveries were approximately 87% of reimbursable operating expenses and real estate taxes for each of the years ended December 31, 2011 and 2010.

(C) Composed of the following (in millions):

	2011		2010		(Decrease) Increase
Management, development, financing and other fee income	$	47.5	$	54.6	$	(7.1	)
Ancillary and other property income		28.7		20.3		8.4
Lease termination fees		5.9		7.5		(1.6	)
Other miscellaneous		0.6		2.1		(1.5	)
	$	82.7	$	84.5	$	(1.8	)

The decrease in management fee income in 2011 is largely a result of asset sales by the Company’s unconsolidated joint ventures from January 1, 2010, through December 31, 2011, as described in Note 2 “Investments in and Advances to Joint Ventures” of the Company’s financial statements. As of December 31, 2011, the Company’s management contracts with Coventry Real Estate Fund II (“Coventry II Fund”) expired by their own terms (see Off-Balance sheet Arrangements). These contracts generated approximately $2.3 million in gross fees related to the Company’s management, development and leasing of the assets in 2011. Additionally, in 2012 the Company entered into a joint venture agreement with an affiliate of The Blackstone Group L.P. to acquire 46 assets managed by the Company in 2011 and 2010. The Company does not anticipate any significant changes in property management and leasing fee income to be earned related to these assets from the new joint venture. The increase in ancillary and other income primarily is related to increased revenue associated with cinema and entertainment operations located at two of the Company’s shopping centers.

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Expenses from Operations (in thousands)

	2011		2010		$ Change			% Change
Operating and maintenance(A)	$	130,007	$	124,318	$	5,689			4.6	%
Real estate taxes(A)		97,997		99,491		(1,494	)		(1.5	)
Impairment charges(B)		67,912		84,855		(16,943	)		(20.0	)
General and administrative(C)		85,221		85,573		(352	)		(0.4	)
Depreciation and amortization(A)		216,820		203,825		12,995			6.4
	$	597,957	$	598,062	$	(105	)		—	%

(A) The changes for 2011 compared to 2010 are due to the following (in millions):

	Operating and Maintenance		Real Estate Taxes			Depreciation
Comparable Portfolio Properties	$	1.8	$	(0.3	)	$	6.5
Acquisitions of shopping centers		0.9		1.6			5.3
Development or redevelopment properties		3.0		(2.8	)		1.2
	$	5.7	$	(1.5	)	$	13.0

The increase in operating and maintenance expenses in 2011 for the Comparable Portfolio Properties primarily is due to higher insurance-related costs and various other property level expenditures. The increase in the development or redevelopment properties is primarily due to increased expenses associated with the cinema and entertainment operations located at two of the Company’s shopping centers. The increase in depreciation expense for the comparable Portfolio Properties primarily is related to tenant improvements that have been placed in service.

(B) The Company recorded impairment charges during the years ended December 31, 2011 and 2010, related to its land and shopping center assets. These impairments are more fully described in Note 11, “Impairment Charges and Impairment of Joint Venture Investments,” of the Company’s financial statements.

(C) General and administrative expenses were approximately 5.2% of total revenues, including total revenues of unconsolidated joint ventures and managed properties and discontinued operations, for both of the years ended December 31, 2011 and 2010. The Company continues to expense internal leasing salaries, legal salaries and related expenses associated with certain leasing and re-leasing of existing space.

During 2011, the Company recorded a charge of $11.0 million as a result of the termination without cause of its Executive Chairman of the Board, the terms of which were pursuant to his amended and restated employment agreement. Total employee severance charges recorded in 2011 were approximately $12.4 million. During 2010, the Company incurred $5.3 million in employee separation charges. The decrease in general and administrative expenses in 2011, excluding separation charges, is due to general cost-cutting measures.

Other Income and Expenses (in thousands)

	2011			2010			$ Change			% Change
Interest income(A)	$	9,832		$	7,302		$	2,530			34.6	%
Interest expense(B)		(225,113	)		(210,587	)		(14,526	)		6.9
(Loss) gain on retirement of debt, net		(89	)		485			(574	)		(118.4	)
Gain (loss) on equity derivative instruments(C)		21,926			(40,157	)		62,083			(154.6	)
Other income (expense), net(D)		(5,002	)		(24,156	)		19,154			(79.3	)
	$	(198,446	)	$	(267,113	)	$	68,667			(25.7	)%

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(A) Increased primarily due to a full year of interest on $58.3 million in loan receivables originated and purchased in September 2010. The weighted-average interest rate of loan receivables at December 31, 2011, was 8.7%.

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

	Year Ended December 31,
	2011			2010
Weighted-average debt outstanding (in billions)	$	4.2		$	4.6
Weighted-average interest rate		5.6	%		5.1	%

The weighted-average interest rate (based on contractual rates and excluding convertible debt accretion and deferred financing costs) at December 31, 2011 and 2010, was 5.2% and 5.1%, respectively.

The increase in 2011 interest expense is primarily due to the repayment of shorter-term, lower interest rate debt with the proceeds from long-term, higher interest rate debt, partially offset by a reduction in outstanding debt. Interest costs capitalized in conjunction with development and redevelopment projects and unconsolidated development and redevelopment joint venture interests were $12.7 million for the year ended December 31, 2011, as compared to $12.2 million for the respective period in 2010. The Company ceases the capitalization of interest as assets are placed in service or upon the suspension of construction.

(C) Represents the impact of the valuation adjustments for the equity derivative instruments issued as part of the stock purchase agreement with the Otto Family. The share issuances, together with the warrant issuances, are collectively referred to as the “Otto Transaction,” as described in Note 10, “Non-Controlling Interests, Preferred Shares, Common Shares and Common Shares in Treasury,” in the Company’s financial statements.

(D) Other income (expenses) were composed of the following (in millions):

	Year Ended December 31,
	2011			2010
Litigation-related expenses	$	(2.3	)	$	(14.6	)
Note receivable reserve		(5.0	)		0.1
Lease liability (obligation) and related settlement gain		2.6			(3.3	)
Debt extinguishment costs, net		(0.7	)		(3.7	)
Abandoned projects and other income (expenses)		0.4			(2.7	)
	$	(5.0	)	$	(24.2	)

The year ended December 31, 2010, included a $5.1 million expense recorded in connection with a legal matter at a property in Long Beach, California. This reserve was partially offset by a tax benefit of approximately $2.4 million because the asset is owned through the Company’s taxable REIT subsidiary (“TRS”). Litigation-related expenses also include costs incurred by the Company to defend the litigation arising from joint venture assets that are owned through the Company’s investments with the Coventry II Fund (see Item 3. — Legal Proceedings). Total litigation-related expenditures, net of the tax benefit of $2.4 million, were $12.2 million for the year ended December 31, 2010.

In June 2011, the Company sold a note receivable with a face value, including accrued but unpaid interest, of $11.8 million for proceeds of $6.8 million. This transaction resulted in the recognition of a reserve of $5.0 million prior to the sale to reduce the loan receivable to fair value.

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

Other Items (in thousands)

	2011			2010			$ Change			% Change
Equity in net income of joint ventures(A)	$	13,734		$	5,600		$	8,134			145.3	%
Impairment of joint venture investments(B)		(2,921	)		(227	)		(2,694	)		1,186.8
Gain on change in control of interests and sale of interests(C)		25,170			—			25,170			(100.0	)
Tax expense of taxable REIT subsidiaries and state franchise and income taxes(D)		(1,028	)		(47,945	)		46,917			(97.9	)

(A) The increase in equity in net income of joint ventures for the year ended December 31, 2011, compared to the prior year is primarily a result of the gain recognized on the sale of an asset by one unconsolidated joint venture of which the Company’s share was $12.6 million and higher income from the Company’s investment in Sonae Sierra Brasil discussed below, partially offset by the Company’s proportionate share of unconsolidated joint venture impairments, loss on sales and the elimination of equity income from unconsolidated joint venture assets sold in 2010.

At December 31, 2011 and 2010, the Company had an approximate 33% and 48% interest, respectively, in an unconsolidated joint venture, Sonae Sierra Brasil, which owns real estate in Brazil and is headquartered in San Paulo, Brazil. In February 2011, Sonae Sierra Brasil completed an initial public offering (“IPO”) of its common shares on the Brazilian Stock Exchange, raising total proceeds of approximately US$280 million. The Company’s effective ownership interest in Sonae Sierra Brasil decreased during the first quarter of 2011 due to the IPO. This entity uses the functional currency of Brazilian reais. The Company has generally chosen not to mitigate any of the foreign currency risk through the use of hedging instruments for this entity. The operating cash flow generated by this investment has been generally retained by the joint venture and reinvested in ground-up developments and expansions in Brazil. The weighted-average exchange rate used for recording the equity in net income was 1.67 and 1.77 for the years ended December 31, 2011 and 2010, respectively. The overall increase in equity in net income from the Sonae Sierra Brasil joint venture, net of the impact of foreign currency translation, primarily is due to shopping center expansion activity coming on line as well as increases in parking revenue, increases in ancillary income and interest income.

(B) The 2011 and 2010 other than temporary impairment charges of the joint venture investments are more fully described in Note 2, “Investments in and Advances to Joint Ventures,” of the Company’s financial statements.

(C) In the first quarter of 2011, the Company acquired its partners’ 50% interest in two shopping centers. The Company accounted for both of these transactions as step acquisitions. In December 2011, the Company sold its 10% interest in an unconsolidated joint venture that owned three shopping centers to its partner. In December 2011, the Company also sold its 50% interest in an unconsolidated joint venture that owned a development project in Oconomowoc, Wisconsin, to its partner. Due to the change in control that occurred, the Company recorded an aggregate net gain associated with these transactions related to the difference between the Company’s carrying value and fair value of the previously held equity interests.

(D) The Company incurred a fourth quarter 2010 income tax expense of $49.9 million recognized due to the establishment of a reserve against certain deferred tax assets within its TRS. See discussion in Comparison of 2010 to 2009 Results of Operations.

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Discontinued Operations (in thousands)

	2011			2010			$ Change			% Change
Loss from discontinued operations(A)	$	(63,840	)	$	(98,650	)	$	34,810			(35.3	)%
Gain on deconsolidation of interests, net(B)		4,716			5,221			(505	)		(9.7	)
Gain on disposition of real estate, net of tax(A)		40,163			5,775			34,388			595.5
	$	(18,961	)	$	(87,654	)	$	68,693			(78.4	)%

(A) The Company sold 21 properties (including the property held for sale at December 31, 2011) from January 1, 2012 through June 30, 2012 and had one property held for sale at June 30, 2012, aggregating 2.7 million square feet, sold 34 properties in 2011, aggregating 2.9 million square feet, and sold 31 properties in 2010, aggregating 2.9 million square feet. Also included in discontinued operations are 26 other properties that were deconsolidated for accounting purposes in 2011 and 2010, aggregating 2.3 million square feet, which primarily represent the activity associated with DDR MDT MV joint venture. This joint venture owns the underlying real estate formerly occupied by Mervyns, which declared bankruptcy in 2008 and vacated all sites as of December 31, 2008 (the “Mervyns Joint Venture”). These assets were classified as discontinued operations for all periods presented, as the Company has no significant continuing involvement. In addition, included in the reported loss for the years ended December 31, 2011 and 2010, is $57.9 million and $87.1 million, respectively, of impairment charges related to assets classified as discontinued operations.

(B) The Company recorded a gain in the years ended December 31, 2011 and 2010, associated with the deconsolidation of assets owned in consolidated joint ventures that were transferred to the control of a court-appointed receiver. The Company recorded a gain because the carrying value of the non-recourse debt exceeded the carrying value of the collateralized assets of the joint ventures. The revenues and expenses associated with these joint ventures are classified within discontinued operations. (See also Mervyns Joint Venture discussion in Off-Balance sheet Arrangements.)

Gain on Disposition of Real Estate (in thousands)

	2011		2010		$ Change		% Change
Gain on disposition of real estate, net(A)	$	7,079	$	1,318	$	5,761		437.1	%

(A) The Company recorded net gains on disposition of real estate and real estate investments as follows (in millions):

	Year Ended December 31,
	2011			2010
Land sales	$	(0.4	)	$	1.0
Previously deferred gains and other gains and losses on dispositions		7.5			0.3
	$	7.1		$	1.3

These dispositions did not meet the criteria for discontinued operations. The previously deferred gains and other gains and losses on dispositions are a result of partial asset sales and assets that were contributed to joint ventures in prior years.

Non-controlling interests (in thousands)

	For the Year Ended December 31,
	2011		2010		$ Change			% Change
Non-controlling interests(A)	$	3,543	$	38,363	$	(34,820	)		(90.8	)%

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(A) The change is a result of impairment charges recorded in 2011 and 2010 by one of the Company’s 75% owned, consolidated investments, which owns land held for development in Russia. In addition, in 2010 non-controlling interests included the net loss attributable to a consolidated joint venture, which held assets previously occupied by Mervyns that were deconsolidated in 2010, and the operating results are reported as a component of discontinued operations.

Net Loss (in thousands)

	2011			2010			$ Change		% Change
Net loss attributable to DDR	$	(15,854	)	$	(209,358	)	$	193,504		(92.4	)%

The decrease in net loss attributable to DDR for the year ended December 31, 2011, as compared to 2010 is primarily the result of the gain on change in control and sale of interests related to the Company’s unconsolidated joint ventures; gain on the sale of assets; a reduction in impairment charges recorded on non-depreciable assets (land); lower income tax expense; and the effect of the valuation adjustments associated with the warrants partially offset by executive separation charges. A summary of changes in 2011 as compared to 2010 is as follows (in millions):

Increase in net operating revenues (total revenues in excess of operating and maintenance expenses and real estate taxes)	$	3.3
Decrease in consolidated impairment charges		16.9
Decrease in general and administrative expenses(A)		0.4
Increase in depreciation expense		(13.0	)
Increase in interest income		2.5
Increase in interest expense		(14.5	)
Reduction of gain on retirement of debt, net		(0.6	)
Change in equity derivative instruments		62.1
Change in other income (expense), net		19.2
Increase in equity in net income of joint ventures		8.1
Increase in impairment of joint venture investments		(2.7	)
Increase in gain on change in control of interests and sale of interests		25.2
Decrease in income tax expense		46.9
Decrease in loss from discontinued operations		68.7
Increase in gain on disposition of real estate		5.8
Change in non-controlling interests		(34.8	)
Decrease in net loss attributable to DDR	$	193.5

(A) Included in general and administrative expenses are executive separation charges of $12.4 million and $5.3 million for the years ended December 31, 2011 and 2010, respectively.

COMPARISON OF 2010 TO 2009 RESULTS OF OPERATIONS

Continuing Operations

Shopping center properties owned as of January 1, 2009, excluding acquisitions, properties under development or redevelopment and those classified in discontinued operations, are referred to herein as the “Comparable Portfolio Properties.”

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Revenues from Operations (in thousands)

	2010		2009		$ Change			% Change
Base and percentage rental revenues(A)	$	498,901	$	492,076	$	6,825			1.4	%
Recoveries from tenants(B)		162,921		161,613		1,308			0.8
Fee and other income(C)		84,540		84,893		(353	)		(0.4	)
Total revenues	$	746,362	$	738,582	$	7,780			1.1	%

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

	Increase (Decrease)
Comparable Portfolio Properties	$	(0.2	)
Acquisition of shopping centers		8.5
Straight-line rents		(1.5	)
	$	6.8

The Company acquired three assets in the fourth quarter of 2009 contributing to the increase above. The decrease in straight-line rents primarily is due to write-offs associated with the early termination of tenant leases.

The following tables present the statistics for the Company’s operating shopping center portfolio (in which the Company has an economic interest) affecting base and percentage rental revenues summarized by the following portfolios: combined shopping center portfolio, office property portfolio, wholly-owned shopping center portfolio and joint venture shopping center portfolio:

	Shopping Center Portfolio(1) December 31,						Office Property Portfolio December 31,
	2010			2009			2010			2009
Centers owned		478			567			6			6
Aggregate occupancy rate		88.4	%		86.8	%		80.7	%		71.4	%
Average annualized base rent per occupied square foot	$	13.30		$	12.95		$	11.05		$	12.35

	Wholly-Owned Shopping Centers December 31,						Joint Venture Shopping Centers(1) December 31,
	2010			2009			2010			2009
Centers owned		286			310			189			223
Consolidated centers primarily owned through a joint venture previously occupied by Mervyns		n/a			n/a			3			34
Aggregate occupancy rate		88.6	%		89.6	%		88.1	%		84.0	%
Average annualized base rent per occupied square foot	$	12.23		$	11.96		$	14.66		$	14.09

⁽¹⁾  Excludes shopping centers owned by unconsolidated joint ventures in which the Company’s investment basis is zero and is receiving no allocation of income or loss.

The Company’s aggregate occupancy rates in 2010 and 2009 are low relative to historical rates due to the impact of the major tenant bankruptcies that occurred in 2008. However, the Company was successful in 2010 in executing leases for numerous previously vacant anchor boxes, resulting in the overall year-over-year improvement in the occupancy rate for the combined portfolio.

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(B) The increase in recoveries is primarily a function of the acquisition of three assets in 2009. Recoveries were approximately 87% and 90% of reimbursable operating expenses and real estate taxes for the years ended December 31, 2010 and 2009, respectively. The decrease in the recoveries percentage is primarily a function of real estate tax assessments discussed below that are not expected to be recoverable from tenants at varying amounts.

(C) Composed of the following (in millions):

	2010		2009		(Decrease) Increase
Management, development, financing and other fee income	$	54.6	$	58.7	$	(4.1	)
Ancillary and other property income		20.3		20.0		0.3
Lease termination fees		7.5		4.0		3.5
Other miscellaneous		2.1		2.2		(0.1	)
	$	84.5	$	84.9	$	(0.4	)

The reduction in management fees was primarily attributed to asset sales by several of the Company’s unconsolidated joint ventures. During 2010, the Company executed lease terminations on three vacant Walmart spaces.

Expenses from Operations (in thousands)

	2010		2009		$ Change			% Change
Operating and maintenance(A)	$	124,318	$	120,988	$	3,330			2.8	%
Real estate taxes(A)		99,491		93,083		6,408			6.9
Impairment charges(B)		84,855		12,245		72,610			593.0
General and administrative(C)		85,573		94,365		(8,792	)		(9.3	)
Depreciation and amortization(A)		203,825		194,311		9,514			4.9
	$	598,062	$	514,992	$	83,070			16.1	%

(A) The changes for 2010 compared to 2009 are due to the following (in millions):

	Operating and Maintenance			Real Estate Taxes		Depreciation
Comparable Portfolio Properties	$	(1.7	)	$	5.2	$	(0.3	)
Acquisitions of shopping centers		1.2			1.2		2.3
Development/redevelopment of shopping center properties		3.8			—		6.3
Personal property		—			—		1.2
	$	3.3		$	6.4	$	9.5

The increase in real estate taxes primarily is due to an approximately $3.0 million real estate tax assessment received in 2010 that was retroactive to 2006 for one of the Company’s largest properties in California. The entire expense for the four-year supplemental tax bill is included in the 2010 results. In addition, the real estate taxes for the Puerto Rico assets increased $1.4 million due to a reassessment effective in the third quarter of 2009. The Company continues to aggressively appeal real estate tax valuations, as appropriate, particularly for those shopping centers affected by major tenant bankruptcies. The increase in depreciation expense primarily is attributable to development assets placed in service and redevelopment activities.

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(B) The Company recorded impairment charges during the years ended December 31, 2010 and 2009, related to its land and shopping center assets. These impairments are more fully described in Note 11, “Impairment Charges and Impairment of Joint Venture Investments,” of the Company’s financial statements.

(C) General and administrative expenses were approximately 5.2% and 5.4% of total revenues, including total revenues of unconsolidated joint ventures and managed properties and discontinued operations, for the years ended December 31, 2010 and 2009, respectively.

During 2010, the Company incurred $5.3 million in employee separation charges. In 2009, the Company recorded an accelerated charge of approximately $15.4 million related to certain equity awards as a result of the Company’s change in control provisions included in the Company’s equity-based award plans (see 2009 Strategic Transaction Activity).

Other Income and Expenses (in thousands)

	2010			2009			$ Change			% Change
Interest income(A)	$	7,302		$	11,966		$	(4,664	)		(39.0	)%
Interest expense(B)		(210,587	)		(206,890	)		(3,697	)		1.8
Gain on retirement of debt, net(C)		485			145,050			(144,565	)		(99.7	)
Loss on equity derivative instruments(D)		(40,157	)		(199,797	)		159,640			(79.9	)
Other income (expense), net(E)		(24,156	)		(28,894	)		4,738			(16.4	)
	$	(267,113	)	$	(278,565	)	$	11,452			(4.1	)%

(A) Decreased primarily due to interest earned from loan receivables, which aggregated $103.7 million and $125.6 million at December 31, 2010 and 2009, respectively. In the fourth quarter of 2009, the Company established a full reserve on an advance to an affiliate of $66.9 million and ceased the recognition of interest income. The Company recorded $7.0 million of interest income during the year ended December 31, 2009, related to this advance. In addition, partially offsetting this decrease is interest income of $1.7 million in 2010 related to $58.3 million in loan receivables issued in mid-September 2010, which does not reflect a full period of income in 2010.

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

	Year Ended December 31,
	2010			2009
Weighted-average debt outstanding (in billions)	$	4.6		$	5.5
Weighted-average interest rate		5.1	%		4.6	%

The weighted-average interest rate (based on contractual rates and excluding convertible debt accretion and deferred financing costs) at December 31, 2010 and 2009, was 5.1% and 4.5%, respectively.

The increase in 2010 interest expense primarily is due to an increase in the spread on the Company’s revolving credit facilities, the unsecured debt issued in 2010 at higher rates and a decrease in the amount of interest expense capitalized, partially offset by a reduction in outstanding debt. Interest costs capitalized in conjunction with development and expansion projects and unconsolidated development joint venture interests were $12.2 million for the year ended December 31, 2010, as compared to $21.8 million for the respective period in 2009. The Company ceases the capitalization of interest as assets are placed in service or upon the suspension of construction. Because the Company has suspended certain construction activities, the amount of capitalized interest has significantly decreased in 2010.

(C) The Company purchased approximately $259.1 million and $816.2 million aggregate principal amount of its outstanding senior unsecured notes, including senior convertible notes, at a net discount to par during the

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years ended December 31, 2010 and 2009, respectively. Approximately $83.1 million and $250.1 million aggregate principal amount of senior unsecured notes repurchased in 2010 and 2009, respectively, occurred through a cash tender offer. Included in the net gain, the Company recorded $4.9 million and $20.9 million related to the required write-off of unamortized deferred financing costs and accretion related to the senior unsecured notes repurchased during the years ended December 31, 2010 and 2009, respectively.

(D) Represents the impact of the valuation adjustments for the equity derivative instruments issued as part of the Otto Transaction (see 2009 Strategic Transaction Activity). The valuation and resulting charges primarily relate to the difference between the closing trading value of the Company’s common shares from the beginning of the period through the end of the respective period presented.

(E) Other (expenses) income were composed of the following (in millions):

	Year Ended December 31,
	2010			2009
Litigation-related expenses	$	(14.6	)	$	(6.4	)
Lease liability obligation		(3.3	)		—
Debt extinguishment costs, net		(3.7	)		(13.9	)
Note receivable reserve		0.1			(5.4	)
Sale of MDT units		—			2.8
Abandoned projects and other expenses		(2.7	)		(6.0	)
	$	(24.2	)	$	(28.9	)

The year ended December 31, 2010, included a $5.1 million expense recorded in connection with a legal matter at a property in Long Beach, California. This reserve was partially offset by a tax benefit of approximately $2.4 million because the asset is owned through the Company’s TRS. Litigation-related expenses also include costs incurred by the Company to defend the litigation arising from joint venture assets that are owned through the Company’s investments with the Coventry II Fund (see Item 3. — Legal Proceedings). Total litigation-related expenditures, net of the tax benefit of $2.4 million, were $12.2 million for the year ended December 31, 2010.

The lease liability reserve related to a charge recorded on three operating leases as a result of an abandoned development project and two office closures.

The Sale of MDT Units in 2009 related to the liquidation of the Company’s interest in MDT (see 2009 Strategic Transaction Activity).

Other Items (in thousands)

	2010			2009			$ Change			% Change
Equity in net income (loss) of joint ventures(A)	$	5,600		$	(9,733	)	$	15,333			(157.5	)%
Impairment of joint venture investments(B)		(227	)		(184,584	)		184,357			(100.0	)
Gain on change in control of interests and sale of interests(C)		—			23,865			(23,865	)		(100.0	)
Tax (expense) benefit of taxable REIT subsidiaries and state franchise and income taxes(D)		(47,945	)		890			(48,835	)		(5,487.1	)

(A) The higher equity in net income of joint ventures for the year ended December 31, 2010, compared to the prior year is primarily a result of a decrease in impairments and losses triggered by joint venture asset sales that occurred prior to January 1, 2010, and operating losses from certain Coventry II Fund investments in 2009. Because the Company wrote off its basis in certain of the Coventry II Fund investments in 2009 and has no intention or obligation to fund any additional losses, no additional operating losses were recorded in 2010 for these investments (see Off-Balance sheet Arrangements).

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At December 31, 2010, the Company had an approximate 48% interest in an unconsolidated joint venture, Sonae Sierra Brasil. The weighted-average exchange rate used for recording the equity in net income was 1.77 and 2.04 for the years ended December 31, 2010 and 2009, respectively.

(B) The Company determined that various of its unconsolidated joint venture investments in 2009 had suffered an “other than temporary impairment” due to the then-deteriorating real estate fundamentals, the market dislocation in the U.S. capital markets, the general lack of liquidity and its related impact on the real estate market and retail industry, which accelerated in the fourth quarter of 2008 and continued through 2009. The other than temporary impairment charges in 2009 were primarily taken for the various investments in the Coventry II Fund joint ventures and at DDRTC Core Retail Fund. A summary of the other than temporary impairment charges by joint venture investment is described in Note 2, “Investment in and Advances to Joint Ventures,” of the Company’s financial statements.

(C) The 2009 activity primarily related to the redemption of the Company’s interest in the MDT US LLC joint venture (See 2009 Strategic Transaction Activity). In October 2009, the EDT Retail Trust (formerly, Macquarie DDR Trust (“MDT”)) (ASX: EDT) (“EDT”) unitholders approved the redemption of the Company’s interest in the MDT US LLC joint venture. A 100% interest in three shopping center assets was transferred to the Company in October 2009 in exchange for its approximate 14.5% ownership interest and an initial cash payment of $1.6 million. The redemption transaction was effectively considered a step acquisition/business combination. As a result, the real estate assets received were recorded at fair value, and a $23.5 million gain was recognized related to the difference between the fair value of the net assets received as compared to the Company’s investment basis in the joint venture.

(D) Management regularly assesses established tax-related reserves and adjusts these reserves when facts and circumstances indicate that a change in estimates is warranted. The Company incurred a fourth quarter 2010 income tax expense of $49.9 million recognized due to the establishment of a reserve against certain deferred tax assets within its TRS, which is described in more detail in Note 16 “Income Taxes” of the Company’s financial statements. Based upon the continued loss activity recognized by the TRS over the past three years, including significant charges in 2010 related to litigation activity as well as a fourth quarter impairment and lease liability charge of $22.3 million associated with an abandoned development project, it was determined that it was more likely than not that the deferred tax assets would not be utilizable, thus requiring a current reserve. The $49.9 million fourth quarter 2010 income tax expense consists of a gross valuation allowance tax expense of $58.3 million reduced by an $8.4 million tax benefit as a result of a $22.3 million abandoned project charge.

Discontinued Operations (in thousands)

	2010			2009			$ Change		% Change
Loss from discontinued operations(A)	$	(98,650	)	$	(164,203	)	$	65,553		(39.9	)%
Gain on deconsolidation of interests, net(B)		5,221			—			5,221		100.0
Gain (loss) on disposition of real estate, net of tax(A)		5,775			(24,027	)		29,802		(124.0	)
	$	(87,654	)	$	(188,230	)	$	100,576		(53.4	)%

(A) The Company sold 21 properties (including the property held for sale at December 31, 2011) from January 1, 2012 through June 30, 2012 and had one property held for sale at June 30, 2012, aggregating 2.7 million square feet, sold 34 properties in 2011, aggregating 2.9 million square feet, sold 31 properties in 2010, aggregating 2.9 million square feet and sold 32 properties in 2009, aggregating 3.8 million square feet. Also included in discontinued operations are 26 other properties that were deconsolidated for accounting purposes in 2011 and 2010, aggregating 2.3 million square feet, which primarily represent the activity associated with the Mervyns Joint Venture. These assets were classified as discontinued operations for all periods presented, as the Company has no significant continuing involvement. In addition, included in the reported loss for the years ended December 31, 2010 and 2009, is $87.1 million and $142.5 million, respectively, of impairment charges related to assets classified as discontinued operations.

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(B) The deconsolidation of the Mervyns Joint Venture resulted in a $5.6 million gain, as the carrying value of the non-recourse debt exceeded the carrying value of the collateralized assets. The revenues and expenses associated with this joint venture are classified within discontinued operations. (See Mervyns Joint Venture discussion in Off-Balance sheet Arrangements.)

Gain on Disposition of Real Estate (in thousands)

	2010		2009		$ Change			% Change
Gain on disposition of real estate, net(A)	$	1,318	$	9,127	$	(7,809	)		(85.6	)%

(A) The Company recorded net gains on disposition of real estate and real estate investments as follows (in millions):

	Year Ended December 31,
	2010		2009
Land sales	$	1.0	$	4.8
Previously deferred gains and other gains and losses on dispositions		0.3		4.3
	$	1.3	$	9.1

The sales of land did not meet the criteria for discontinued operations because the land did not have any significant operations prior to disposition. The previously deferred gains are a result of assets that were contributed to joint ventures in prior years.

Non-controlling interests (in thousands)

	For the Year Ended December 31,
	2010		2009		$ Change			% Change
Non-controlling interests(A)	$	38,363	$	47,047	$	(8,684	)		(18.5	)%

(A) The change in loss attributable to non-controlling interests includes the following (in millions):

	Increase (Decrease)
Mervyns Joint Venture — non-controlling interest	$	(21.5	)
Other non-controlling interests		12.7
Decrease in distributions to operating partnership unit investments		0.1
	$	(8.7	)

The Company’s proportionate share of impairment losses of $18.8 million in the Mervyns Joint Venture during the year ended December 31, 2010, was lower than the $35.1 million in 2009. This entity was deconsolidated in 2010, and the operating results are retrospectively reported as a component of discontinued operations. (See Mervyns Joint Venture discussion in Off-Balance sheet Arrangements.) Partially offsetting this decrease are losses associated with the impairment charges recorded in 2010 by one of the Company’s 75% owned consolidated investments, which owns land held for development in Russia.

Net Loss (in thousands)

	2010			2009			$ Change		% Change
Net loss attributable to DDR	$	(209,358	)	$	(356,593	)	$	147,235		(41.3	)%

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The decrease in net loss attributable to DDR for the year ended December 31, 2010, as compared to 2009 is primarily the result of a decrease in impairment-related charges and lower expense associated with the equity derivative instruments partially offset by the establishment of a reserve against certain deferred tax assets in 2010 and lower gain on debt retirement. A summary of changes in 2010 as compared to 2009 is as follows (in millions):

Decrease in net operating revenues (total revenues in excess of operating and maintenance expenses and real estate taxes)	$	(1.9	)
Increase in consolidated impairment charges		(72.6	)
Decrease in general and administrative expenses		8.8
Increase in depreciation expense		(9.5	)
Decrease in interest income		(4.7	)
Increase in interest expense		(3.7	)
Decrease in gain on retirement of debt, net		(144.6	)
Decrease in loss on equity derivative instruments		159.6
Change in other income (expense), net		4.7
Increase in equity in net income of joint ventures		15.3
Decrease in impairment of joint venture investments		184.4
Reduction in gain on change in control of interests and sale of interests		(23.9	)
Increase in income tax expense		(48.8	)
Increase in income from discontinued operations(A)		100.6
Decrease in gain on disposition of real estate		(7.8	)
Change in non-controlling interests		(8.7	)
Decrease in net loss attributable to DDR	$	147.2

(A) Includes a $55.4 million decrease in impairment charges.

FUNDS FROM OPERATIONS

Definition and Basis of Presentation

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

FFO excludes GAAP historical cost depreciation and amortization of real estate and real estate investments, which assume that the value of real estate assets diminishes ratably over time. Historically, however, real estate values have risen or fallen with market conditions, and many companies use different depreciable lives and methods. Because FFO excludes depreciation and amortization unique to real estate, gains and certain losses from depreciable property dispositions, and extraordinary items, it can provide a performance measure that, when compared year over year, reflects the impact on operations from trends in occupancy rates, rental rates, operating costs, acquisition, disposition and development activities and interest costs. This provides a perspective of the Company’s financial performance not immediately apparent from net income determined in accordance with GAAP.

FFO is generally defined and calculated by the Company as net income (loss), adjusted to exclude (i) preferred share dividends, (ii) gains and losses from disposition of depreciable real estate property, which are presented net of taxes, (iii) impairment charges on depreciable real estate property and related investments, (iv) extraordinary items and (v) certain non-cash items. These non-cash items principally include real property depreciation and amortization of intangibles, equity income (loss) from joint ventures and equity income (loss) from non-controlling interests, and adding the Company’s proportionate share of FFO from its unconsolidated

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joint ventures and non-controlling interests, determined on a consistent basis. For the periods presented below, the Company’s calculation of FFO is consistent with the definition of FFO provided by the National Association of Real Estate Investment Trusts (“NAREIT”) as affirmed by NAREIT on October 31, 2011. Other real estate companies may calculate FFO in a different manner.

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

The original NAREIT definition of FFO did not explicitly address the treatment of impairment charges of depreciable real estate. As a result, there were different industry views regarding whether such charges should be excluded from FFO. The Company’s historical calculation of FFO included impairment charges as well as losses on sale of depreciable real estate. On October 31, 2011, NAREIT clarified that the exclusion of impairment charges of depreciable real estate is consistent with the definition of FFO. Further, NAREIT indicated that it preferred companies restate previously reported NAREIT FFO in order to provide consistent and comparable presentation of FFO measures. As a result, in the fourth quarter of 2011, the Company modified its definition of FFO to comply with the NAREIT definition as it related to impairment charges and losses on sale of depreciable real estate and related investments. The Company has adjusted its computation of FFO to conform to NAREIT’s presentation for all periods presented. As a result of this adjustment, the Company’s presentation of Operating FFO will no longer reflect an adjustment for impairment charges and losses on sale of depreciable real estate and related investments.

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

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

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

Management recognizes limitations of FFO and Operating FFO when compared to GAAP’s income from continuing operations. FFO and Operating FFO do not represent amounts available for dividends, capital replacement or expansion, debt service obligations or other commitments and uncertainties. Management does not use FFO or Operating FFO as an indicator of the Company’s cash obligations and funding requirements for future commitments, acquisitions or development activities. Neither FFO nor Operating FFO represents cash generated from operating activities in accordance with GAAP, and neither is necessarily indicative of cash

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available to fund cash needs, including the payment of dividends. Neither FFO nor Operating FFO should be considered an alternative to net income (computed in accordance with GAAP) or as an alternative to cash flow as a measure of liquidity. FFO and Operating FFO are simply used as additional indicators of the Company’s operating performance. The Company believes that to further understand its performance, FFO and Operating FFO should be compared with the Company’s reported net income (loss) and considered in addition to cash flows in accordance with GAAP, as presented in its consolidated financial statements.

Reconciliation Presentation

In 2011, FFO applicable to DDR common shareholders was $227.6 million, compared to $76.3 million in 2010 and $128.7 million in 2009. The increase in FFO for the year ended December 31, 2011 as compared to the prior year, was primarily the result of the gain on change in control and sale of interests related to the Company’s unconsolidated joint ventures, a reduction in impairment charges recorded on non-depreciable assets (land), lower income tax expense and the effect of the non-cash valuation adjustments associated with the warrants, partially offset by executive separation charges and the write-off of the original issuance costs from the redemption of the Company’s Class G cumulative redeemable preferred shares.

In 2011, Operating FFO applicable to DDR common shareholders was $267.1 million, compared to $264.3 million in 2010 and $298.2 million in 2009. The slight increase in Operating FFO for the year ended December 31, 2011, primarily was the result of increased revenue and interest income and reduced general and administrative costs, partially offset by higher interest expense.

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

	For the Year Ended
	(As Adjusted)
	2011			2010			2009
Net loss applicable to DDR common shareholders(A),(B)	$	(53.8	)	$	(251.6	)	$	(398.9	)
Depreciation and amortization of real estate investments		221.2			217.2			224.2
Equity in net (income) loss of joint ventures		(13.7	)		(5.6	)		9.3
Impairment of joint venture investments(C)		1.3			0.2			95.1
Joint ventures’ FFO(C),(D)		57.6			54.7			59.1
Non-controlling interests (OP Units)		0.1			—			0.2
Impairment of depreciable real estate assets, net of non-controlling interests(C)		62.7			68.2			119.1
(Gain) loss on disposition of depreciable real estate, net(C)		(47.8	)		(6.8	)		20.6
FFO applicable to DDR common shareholders		227.6			76.3			128.7
Total non-operating items(E)		39.5			188.0			169.5
Operating FFO applicable to DDR common shareholders	$	267.1		$	264.3		$	298.2

(A) Includes the deduction of preferred dividends of $31.6 million, $42.3 million and $42.3 million in 2011, 2010 and 2009, respectively. Also includes a charge of $6.4 million related to the write off of the Class G cumulative redeemable preferred shares’ original issuance costs in 2011.

(B) Includes straight-line rental revenue of approximately $0.9 million, $2.5 million and $ 4.3 million in 2011, 2010 and 2009, respectively (including discontinued operations). In addition, includes straight-line ground rent expense of approximately $2.0 million, $2.0 million and $1.9 million in 2011, 2010 and 2009, respectively (including discontinued operations).

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(C) Amounts adjusted to exclude impairment charges and losses on sale of depreciable assets as follows (in millions):

	For the Year Ended
	2011		2010		2009
Impairment of joint venture investments	$	1.3	$	0.2	$	95.1
Joint ventures’ FFO		15.4		7.2		15.4
Impairment of depreciable real estate assets, net		62.7		68.2		119.1
Loss on disposition of depreciable real estate assets		23.8		12.0		43.7
	$	103.2	$	87.6	$	273.3

(D) At December 31, 2011, 2010 and 2009, the Company had an economic investment in unconsolidated joint venture interests related to 177, 189 and 223 operating shopping center properties, respectively. These joint ventures represent the investments in which the Company was recording its share of equity in net income or loss and, accordingly, FFO.

Joint ventures’ FFO is summarized as follows (in millions):

	For the Year Ended
	(As Adjusted)
	2011			2010			2009
Net loss attributable to unconsolidated joint ventures(1)	$	(251.2	)	$	(64.4	)	$	(495.0	)
Impairment of depreciable real estate assets		272.5			21.0			204.8
(Gain) loss on disposition of depreciable real estate, net		(18.7	)		26.7			19.5
Depreciation and amortization of real estate investments		182.7			198.3			244.2
FFO	$	185.3		$	181.6		$	(26.5	)
FFO at DDR’s ownership interests(2)	$	57.6		$	54.7		$	59.1

⁽¹⁾  Revenues for the three years ended December 31, 2011, include the following (in millions):

	2011		2010		2009
Straight-line rents	$	4.6	$	3.9	$	2.7
DDR’s proportionate share	$	0.9	$	0.6	$	0.2

⁽²⁾  FFO at DDR ownership interests considers the impact of basis differentials.

(E) Amounts are described below in the Operating FFO Adjustments section.

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Operating FFO Adjustments

The Company’s adjustments to arrive at Operating FFO are composed of the following for the years ended December 31, 2011, 2010 and 2009 (in millions). The Company provides no assurances that these charges and gains are non-recurring. These charges and gains could be reasonably expected to recur in future results of operations.

	For the Year Ended (As Adjusted)
	2011			2010			2009
Impairment charges — non-depreciable consolidated assets	$	63.2		$	84.8		$	0.4
Executive separation and related compensation and benefit charges(A)		12.4			5.6			15.4
Loss (gain) on debt retirement, net(B)		0.1			(0.5	)		(145.1	)
(Gain) loss on equity derivative instruments(B)		(21.9	)		40.2			199.8
Other expense (income), net(C)		5.0			22.0			30.0
Equity in net (income) loss of joint ventures — gain on sale of land, gain on debt extinguishment, currency adjustments and derivative losses		(1.2	)		(0.6	)		3.7
Impairment of joint venture investments on non-depreciable assets		1.6			—			89.4
(Gain) loss on change in control and sale of interests, net(B)		(25.2	)		0.4			(23.9	)
Tax expense — deferred tax assets reserve(D)		—			49.9			—
Discontinued operations — loss on debt extinguishment		6.8			—			(0.7	)
Discontinued operations — FFO associated with Mervyns Joint Venture, net of non-controlling interest		—			4.4			—
Discontinued operations — gain on deconsolidation of interests, net		(4.7	)		(5.6	)		—
Loss (gain) on disposition of real estate (land), net		0.9			(0.2	)		0.5
Non-controlling interest — portion of impairment charges allocated to outside partners		(3.9	)		(12.4	)		—
Write-off of preferred share original issuance costs(B)		6.4			—			—
Total non — operating items	$	39.5		$	188.0		$	169.5
FFO applicable to DDR common shareholders		227.6			76.3			128.7
Operating FFO applicable to DDR common shareholders	$	267.1		$	264.3		$	298.2

(A) Amounts included in general and administrative expenses.

(B) Amount agrees to the face of the consolidated statements of operations.

(C) Amounts included in other expense (income) in the consolidated statements of operations and detailed as follows (in millions):

	2011			2010		2009
Litigation-related expenses, net of tax	$	2.3		$	12.2	$	6.7
Note receivable reserve		5.0			—		5.4
Debt extinguishment costs		0.7			3.7		14.4
(Settlement of) lease liability obligation		(2.6	)		3.3		—
Sales of MDT units		—			—		(2.8	)
Abandoned projects and other (income) expenses		(0.4	)		2.8		6.3
	$	5.0		$	22.0	$	30.0

(D) The $49.9 million net income tax expense consists of a gross valuation allowance tax expense of $58.3 million reduced by an $8.4 million tax benefit attributed to a $22.3 million abandoned project charge.

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LIQUIDITY AND CAPITAL RESOURCES

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

The Company’s and its unconsolidated debt obligations generally require monthly or semi-annual payments of principal and/or interest over the term of the obligation. While the Company currently believes that it has several viable sources to obtain capital and fund its business, no assurance can be provided that these obligations will be refinanced or repaid as currently anticipated.

The Company maintains an unsecured revolving credit facility with a syndicate of financial institutions, arranged by JP Morgan Securities LLC and Wells Fargo Securities, LLC (the “Unsecured Credit Facility”). In June 2011, the Company amended the Unsecured Credit Facility and reduced its availability from $950 million to $750 million. The maturity date was extended to February 2016. The Unsecured Credit Facility includes an accordion feature for expansion of availability to $1.25 billion upon the Company’s request, provided that new or existing lenders agree to the existing terms of the facility and increase their commitment level. The Company also maintains a $65 million unsecured revolving credit facility with PNC Bank, National Association (the “PNC Facility” and, together with the Unsecured Credit Facility, the “Revolving Credit Facilities”) that was amended in June 2011 to match the terms of the Unsecured Credit Facility. The Company’s borrowings under these facilities bear interest at variable rates based on LIBOR plus 165 basis points, subject to adjustment based on the Company’s corporate credit ratings from Moody’s Investors Service (“Moody’s”) and Standard and Poor’s (“S&P”), which reflects a reduction in the interest rates from LIBOR plus 275 basis points.

The Revolving Credit Facilities and the indentures under which the Company’s senior and subordinated unsecured indebtedness is, or may be, contain certain financial and operating covenants including, among other things, leverage ratios and debt service coverage and fixed charge coverage ratios, as well as limitations on the Company’s ability to incur secured and unsecured indebtedness, sell all or substantially all of the Company’s assets and engage in mergers and certain acquisitions. These credit facilities and indentures also contain customary default provisions including the failure to make timely payments of principal and interest payable thereunder, the failure to comply with the Company’s financial and operating covenants, the occurrence of a material adverse effect on the Company and the failure of the Company or its majority-owned subsidiaries (i.e., entities in which the Company has a greater than 50% interest) to pay when due certain indebtedness in excess of certain thresholds beyond applicable grace and cure periods. In the event the Company’s lenders or note holders declare a default, as defined in the applicable agreements governing the debt, the Company may be unable to obtain further funding, and/or an acceleration of any outstanding borrowings may occur. As of December 31, 2011, the Company was in compliance with all of its financial covenants in the agreements governing its debt. Although the Company intends to operate in compliance with these covenants, if the Company were to violate these covenants, the Company may be subject to higher finance costs and fees or accelerated maturities. The Company’s believes that it will continue to be able to operate in compliance with these covenants in 2012 and beyond.

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

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

Cash and cash equivalents	$	41.2
Revolving Credit Facilities	$	815.0
Less:
Amount outstanding		(142.4	)
Letters of credit		(9.1	)
Borrowing capacity available	$	663.5

Additionally, as of February 10, 2012, the Company had available for future issuance $200 million of its common shares under its continuous equity program.

The Company intends to maintain a longer-term financing strategy and continue to reduce its reliance on short-term debt. The Company believes its Revolving Credit Facilities are sufficient for its liquidity strategy and longer-term capital structure needs. Part of the Company’s overall strategy includes scheduling future debt maturities in a balanced manner, including incorporating a healthy level of conservatism regarding possible future market conditions.

In January 2012, the Company entered into a $250 million unsecured term loan (“Unsecured Term Loan”) and a $103.0 million mortgage loan (“Mortgage Loan”). These financings address the majority of the Company’s 2012 consolidated debt maturities and improve debt durations, which further reduces the Company’s risk profile. It is the Company’s expectation that the proceeds from the Unsecured Term Loan will be used to retire the convertible unsecured notes due March 2012. The Unsecured Term Loan consists of a $200 million tranche that bears interest at variable rates based on LIBOR plus 210 basis points with a maturity date of January 2019, and a $50 million tranche that bears interest at variable rates based on LIBOR plus 170 basis points with a maturity date of January 2017. Additionally, the Company entered into interest rate swaps on the $200 million tranche to fix the interest rate at 3.64%. Interest rates on both tranches are subject to adjustments based on the Company’s current unsecured credit rating. The Mortgage Loan bears interest at 3.4% with a maturity date in 2019 and is secured by three prime shopping centers.

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

In March 2011, the Otto Family exercised their warrants for 10 million common shares for cash proceeds of $60.0 million. In April 2011, the Company issued 9.5 million of its common shares for gross proceeds of $130.2 million, or $13.71 per share. The net proceeds from the issuance of these common shares were used to redeem $180.0 million of the Company’s 8.0% Class G cumulative redeemable preferred shares in April 2011. The excess proceeds were used for general corporate purposes.

In June 2011, the Company amended its secured term loan arranged by KeyBank Capital Markets and JP Morgan Securities, LLC, reducing the amount outstanding from $550 million to $500 million. The new secured term loan matures in September 2014 and has a one-year extension option.

The Company is focused on the timing and deleveraging opportunities for the consolidated debt maturing in 2012. The consolidated maturities for 2012 include convertible unsecured notes due March 2012 and unsecured notes due October 2012 with outstanding aggregate principal amounts of $179.5 million and $223.5 million, respectively. The 2012 mortgage maturities aggregate approximately $113.8 million, of which $10.5 million was repaid in February 2012 from borrowings under the Company’s Revolving Credit Facilities, $23.5 million was refinanced in January 2012, extending maturity to 2015, and $33.6 million has a one-year extension option.

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At February 10, 2012, there were no other unsecured maturities until May 2015. Management believes that the scheduled debt maturities in future years are manageable. The Company continually evaluates its debt maturities and, based on management’s assessment, believes it has viable financing and refinancing alternatives.

The Company continues to look beyond 2012 to ensure that it executes its strategy to lower leverage, increase liquidity, improve the Company’s credit ratings and extend debt duration, with the goal of lowering the Company’s risk profile and long-term cost of capital.

Unconsolidated Joint Ventures

At December 31, 2011, the Company’s unconsolidated joint venture mortgage debt that had matured and is now past due was $39.8 million, all of which was attributable to the Coventry II Fund assets (see Off-Balance Sheet Arrangements). At December 31, 2011, the Company’s unconsolidated joint venture mortgage debt maturing in 2012 was $1.4 billion (of which the Company’s proportionate share is $293.3 million). Of this amount, $205.6 million (of which the Company’s proportionate share is $40.1 million) was attributable to the Coventry II Fund assets (see Off-Balance Sheet Arrangements). As of February 10, 2012, one of the mortgages maturing in 2012 attributable to the Coventry II Fund assets, with borrowings outstanding of $20.3 million (of which the Company’s proportionate share is $4.1 million) was refinanced.

Cash Flow Activity

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

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

	Year Ended December 31,
	2011			2010			2009
Cash flow provided by operating activities	$	273,195		$	278,124		$	228,935
Cash flow provided by investing activities		200,696			31,762			150,884
Cash flow used for financing activities		(451,854	)		(317,065	)		(381,348	)

Operating Activities:    There were no significant changes from operating activities for the year ended December 31, 2011 as compared to the year ended December 31, 2010.

Investing Activities:    The change in cash flow from investing activities for the year ended December 31, 2011, as compared to the year ended December 31, 2010, primarily was due to increases in proceeds from note repayments and disposition of real estate; which was partially offset by an increase in real estate/capital expenditure spending.

Financing Activities:    The change in cash flow used for financing activities for the year ended December 31, 2011, as compared to the year ended December 31, 2010, primarily was due to a decrease in proceeds received from the issuance of common shares and senior notes, the redemption of preferred shares; which was partially offset by a decrease in the level of debt repayments.

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The Company satisfied its REIT requirement of distributing at least 90% of ordinary taxable income with declared common and preferred share cash dividends of $92.8 million in 2011, as compared to $62.5 million of cash dividends paid in 2010 and $106.8 million of dividends paid in a combination of cash and the Company’s common shares in 2009. Because actual distributions were greater than 100% of taxable income, federal income taxes were not incurred by the Company in 2011.

The Company declared cash dividends of $0.22 per common share in 2011, $0.04 per common share in the first and second quarters, $0.06 per common share in the third quarter and $0.08 per common share in the fourth quarter. In January 2012, the Company declared its first quarter 2012 dividend of $0.12 per common share payable on April 3, 2012, to shareholders of record at the close of business on March 16, 2012. The Board of Directors of the Company will continue to monitor the 2012 dividend policy and provide for adjustments as determined to be in the best interests of the Company and its shareholders to maximize the Company’s free cash flow, while still adhering to REIT payout requirements.

SOURCES AND USES OF CAPITAL

2012 Strategic Transaction Activity

In January 2012, affiliates of the Company and The Blackstone Group L.P. (“Blackstone”) formed a joint venture that is expected to acquire a portfolio of 46 shopping centers owned by EPN Group and managed by the Company, valued at approximately $1.4 billion, including assumed debt of $640 million and at least $305 million of anticipated new financings. The assumed debt has a weighted-average interest rate of 4.4% and maturity dates ranging from 2013 to 2017. An affiliate of Blackstone will own 95% of the common equity of the joint venture, and the remaining 5% interest will be owned by an affiliate of DDR. DDR is also expected to invest $150 million in preferred equity in the venture with a fixed dividend rate of 10%, and will continue to provide leasing and property management services for the portfolio. In addition, DDR will have the right of first offer to acquire 10 of the assets under specified conditions.

2011 Strategic Transaction Activity

Strategic Purchase and Sale Transactions

The Company and Glimcher Realty Trust (NYSE: GRT) (“Glimcher”) entered into an agreement to swap two assets better aligned with the other’s operating platforms and strategies. The Company sold its open-air mall, Town Center Plaza, in Kansas City, Kansas, to Glimcher for approximately $139 million and incurred $7.7 million in costs with the existing loan encumbering this asset that was defeased immediately prior to closing. Glimcher sold its power center, Polaris Towne Center, in Columbus, Ohio, to the Company for $79.6 million, including the assumption of approximately $45.2 million in debt currently encumbering the property, which matures in 2020. The Company recognized a gain of approximately $62.4 million in connection with the sale of Town Center Plaza.

Acquisitions

In 2011, the Company acquired four shopping centers (Polaris Towne Center in Columbus, Ohio as discussed above, Chapel Hills East in Colorado Springs, Colorado and Cotswold Village Shopping Center and Terraces at South Park, both in Charlotte, North Carolina) aggregating 1.2 million square feet of Company-owned gross leasable area for an aggregate purchase price of approximately $189.6 million. The Company assumed approximately $112.3 million of mortgage debt at a fair market value of approximately $122.9 million in connection with these acquisitions.

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In January and March 2011, in two separate transactions, the Company acquired its partners’ 50% ownership interests in two shopping centers for an aggregate purchase price of $39.9 million. The Company acquired these assets pursuant to the terms of the respective underlying joint venture agreements. After closing, the Company repaid one mortgage note payable with a principal amount of $29.2 million in total and refinanced the other mortgage with a new $21.0 million, 11-year mortgage note payable. As a result of the transactions, the Company owns 100% of the two shopping centers with an aggregate gross value of approximately $80.0 million. Due to the change in control that occurred, the Company recorded an aggregate gain of approximately $22.7 million associated with the acquisitions related to the difference between the Company’s carrying value and fair value of its previously held equity interest on the respective acquisition date.

Dispositions

As discussed above, a part of the Company’s portfolio management strategy is to recycle capital from lower quality, lower growth assets into prime assets with long-term growth potential. The Company has been marketing non-prime assets for sale and is focused on selling single-tenant assets and/or smaller shopping centers that do not meet the Company’s current business strategy. The Company has entered into agreements, including contracts executed through February 10, 2012, to sell real estate assets that are subject to contingencies. An aggregate loss of approximately one million dollars could be recorded if all such sales were consummated on the terms as negotiated through February 10, 2012. Given the Company’s experience over the past few years, it is difficult for many buyers to complete these transactions in the timing contemplated or at all. The Company has not recorded an impairment charge on the assets that would result in a loss at December 31, 2011, as the undiscounted cash flows, when considering and evaluating the various alternative courses of action that may occur, exceed the assets’ current carrying value. The Company evaluates all potential sale opportunities taking into account the long-term growth prospects of assets being sold, the use of proceeds and the impact to the Company’s balance sheet, in addition to the impact on operating results. As a result, if actual results differ from expectations, it is possible that additional assets could be sold in subsequent periods for a gain or loss after taking into account the above considerations.

In 2011, the Company sold 33 shopping center properties and one office property in various states, aggregating 2.9 million square feet, for an aggregate sales price of $271.6 million. In addition, the Company sold $58.0 million of consolidated non-income producing assets or interests in assets. The Company recorded a net loss of $47.2 million, which excludes the impact of $92.1 million in related impairment charges that were recorded in prior periods.

In 2011, the Company’s unconsolidated joint ventures had the following sales transactions, excluding those properties acquired by the Company as described above:

Joint Venture	Company’s Effective Ownership Percentage			Company- Owned Square Feet (Thousands)		Sales Price (Millions)		Company’s Proportionate Share of Gain (Loss) (Millions)(A)
DDRA Community Centers Five (one asset)		50.0	%		278	$	50.3	$	12.6
Retail Value Investment Program VIII (one asset)		25.75	%		283		29.0		(1.8	)
DDR Domestic Retail Fund I (three assets)		20.0	%		228		28.6		(0.2	)
DDRTC Core Retail Fund (two assets)		15.0	%		543		23.4		(0.5	)
					1,332	$	131.3	$	10.1

(A) The Company’s proportionate share of gain was adjusted by basis differentials from the Company’s investment in the assets created by previously recorded deferred gains and impairment charges.

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Developments and Redevelopments

As part of its portfolio management strategy to develop, expand, improve and re-tenant various consolidated properties, the Company expended an aggregate of approximately $50.8 million on a net basis, after deducting sales proceeds from outlot sales, to develop, expand, improve and re-tenant various consolidated properties during 2011.

The Company will continue to closely monitor its expected spending in 2012 for developments and redevelopments, both for consolidated and unconsolidated projects, as the Company considers this funding to be discretionary spending. The Company does not anticipate expending a significant amount of funds on joint venture development projects in 2012, excluding projects at Sonae Sierra Brasil. The projects in Brazil are expected to be funded with proceeds from the recently completed IPO or entity-level financing. One of the important benefits of the Company’s asset class is the ability to phase development projects over time until appropriate leasing levels can be achieved. To maximize the return on capital spending and balance the Company’s de-leveraging strategy, the Company generally adheres to strict investment criteria thresholds. The revised underwriting criteria generally followed for almost the past three years includes a higher cash-on-cost project return threshold and incorporates a longer period before the leases commence and a higher stabilized vacancy rate. The Company applies this revised strategy to both its consolidated and certain unconsolidated joint ventures that own assets under development because the Company has significant influence and, in most cases, approval rights over decisions relating to significant capital expenditures.

The Company has two consolidated projects that are being developed in phases at a projected aggregate net cost of approximately $204.0 million. At December 31, 2011, approximately $189.7 million of costs had been incurred in relation to these projects. The Company is also redeveloping nine shopping centers (one owned by a consolidated joint venture) at a projected aggregate net cost of approximately $110.7 million. At December 31, 2011, approximately $72.3 million of costs had been incurred in relation to these redevelopment projects.

At December 31, 2011, the Company had approximately $451.3 million of recorded costs related to land and projects under development, for which active construction had temporarily ceased or had not yet commenced. Based on the Company’s intentions and business plans, the Company believes that the expected undiscounted cash flows exceed its current carrying value on each of these projects. However, if the Company were to dispose of certain of these assets in the market, the Company would likely incur a loss, which may be material. The Company believes it evaluates its intentions with respect to these assets each reporting period and records an impairment charge equal to the difference between the current carrying value and fair value when the expected undiscounted cash flows are less than the asset’s carrying value.

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

2010 Strategic Transaction Activity

Dispositions

In 2010, the Company sold 31 shopping center properties in various states, aggregating 2.9 million square feet, at a sales price of $150.7 million. The Company recorded a net gain of $5.8 million, which excludes the impact of $77.3 million in related impairment charges.

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In 2010, the Company’s unconsolidated joint ventures had the following sales transactions:

Joint Venture	Company’s Effective Ownership Percentage			Company- Owned Square Feet (Thousands)		Sales Price (Millions)		Company’s Proportionate Share of Gain (Loss) (Millions)(A)
Retail Value Investment Program VII (two assets)		21.0	%		717	$	108.2	$	7.0
DDR–SAU Retail Fund (one asset)		20.0	%		7		1.3		—
Service Holdings (four assets)		20.0	%		218		3.5		—
DDRTC Core Retail Fund (22 assets)		15.0	%		3,854		455.9		(2.1	)
DPG Realty Holdings (seven assets)		10.0	%		760		46.9		—
					5,556	$	615.8	$	4.9

(A) The Company’s proportionate share of loss was reduced by the impairment charges previously recorded against its investment in the joint venture.

Developments, Redevelopments and Expansions

During 2010, the Company expended an aggregate of approximately $102.7 million, net, after deducting sales proceeds from outlot sales, to develop, expand, improve and re-tenant various consolidated properties.

2009 Strategic Transaction Activity

Otto Transaction

On February 23, 2009, the Company entered into a stock purchase agreement (the “Stock Purchase Agreement”) with the with Mr. Alexander Otto (the “Investor”) and certain members of the Otto family (collectively with the Investor, the “Otto Family”) to issue and sell 30.0 million common shares to the Investor and certain members of the Otto Family for aggregate gross proceeds of approximately $112.5 million. In addition, the Company issued warrants to purchase up to 10.0 million common shares with an exercise price of $6.00 per share to the Otto Family. Under the terms of the Stock Purchase Agreement, the Company issued additional common shares to the Otto Family in an amount equal to dividends payable in shares declared by the Company after February 23, 2009, and prior to the applicable closing.

On April 9, 2009, the Company’s shareholders approved the sale of the common shares and warrants to the Otto Family pursuant to the Otto Transaction. The transaction occurred in two closings. In May 2009, the Company issued and sold 15.0 million common shares and warrants to purchase 5.0 million common shares to the Otto Family for a purchase price of $52.5 million. In September 2009, the Company issued and sold 15.0 million common shares and warrants to purchase 5.0 million common shares to the Otto Family for a purchase price of $60.0 million. The Company also issued an additional 1,071,428 common shares as a result of the first quarter 2009 dividend to the Otto Family, associated with the initial 15.0 million common shares, and 1,787,304 common shares as a result of the first- and second-quarter 2009 dividends to the Otto Family, associated with the second 15.0 million common shares. As a result, the Company issued 32.8 million common shares and warrants to purchase 10.0 million common shares to the Otto Family in 2009. In 2011, the warrants were exercised for $60.0 million in cash.

The shareholders’ approval of the Otto Transaction in April 2009 resulted in a “potential change in control” as of that date under the Company’s equity-based award plans. In addition, in September 2009, as a result of the second closing in which the Otto Family acquired beneficial ownership of more than 20% of the Company’s outstanding common shares, a “change in control” was deemed to have occurred under the Company’s equity deferred compensation plans. In accordance with the equity-based award plans, all unvested stock options

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became fully exercisable and all restrictions on unvested shares lapsed, and, in accordance with the equity deferred compensation plans, all unvested deferred stock units vested and were no longer subject to forfeiture. As such, the Company recorded charges for the year ended December 31, 2009, of $15.4 million.

The equity forward commitments and warrants were considered derivatives. However, the equity forward commitments and warrants did not qualify for equity treatment due to the existence of downward price protection provisions. As a result, both instruments were required to be recorded at fair value as of the shareholder approval date of April 9, 2009, and marked-to-market through earnings as of each balance sheet date thereafter until exercise or expiration.

DDR Macquarie Fund/EDT Retail Trust

In 2003, the Company formed a joint venture with Macquarie Bank to acquire ownership interests in institutional-quality community center properties in the United States (“DDR Macquarie Fund”). In 2010, Macquarie DDR Trust (“MDT”) was recapitalized with an investment by EPN GP, LLC and became known as EDT. The Company continues to be engaged to manage day-to-day operations of the properties and receives fees at prevailing rates for property management, leasing, construction management, acquisitions, dispositions (including outparcel dispositions) and financings.

During December 2008, the Company and MDT modified certain terms of their investment that provided for the redemption of the Company’s interest with properties in the DDR Macquarie Fund in lieu of cash or MDT shares. In October 2009, the MDT unitholders approved the redemption of the Company’s interest in the MDT US LLC joint venture. A 100% interest in three shopping center assets was transferred to the Company in October 2009 in exchange for its approximate 14.5% ownership interest and assumption of $65.3 million of non-recourse debt, and a cash payment of $1.6 million was made to the DDR Macquarie Fund. The redemption transaction was effectively considered a business combination. As a result, the real estate assets received were recorded at fair value, and a $23.5 million gain was recognized related to the difference between the fair value of the net assets received as compared to the Company’s then-investment basis in the joint venture.

The Company believed this transaction simplified the ownership structure of the joint venture and enhanced flexibility for both DDR and EDT while lowering the Company’s leverage. As a result of this transaction, the Company’s proportionate share of unconsolidated joint venture debt was reduced by approximately $146 million, offset by the assumption of debt by the Company of approximately $65.3 million, resulting in an overall reduced leverage of approximately $80 million in 2009.

Macquarie DDR Trust Liquidation

In 2009, the Company liquidated its investment in MDT units for aggregate proceeds of $6.4 million. The Company recorded a gain on sale of these units of approximately $2.8 million during the year ended December 31, 2009, which is included in other income on the consolidated statement of operations. During 2008, the Company recognized an other than temporary impairment charge of approximately $31.7 million on this investment.

Dispositions

In 2009, the Company sold 32 shopping center properties in various states, aggregating 3.8 million square feet, at a sales price of $332.7 million. The Company recorded a net gain of $24.5 million, which excludes the impact of $74.1 million in related impairment charges.

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In 2009, the Company’s unconsolidated joint ventures had the following sales transactions, excluding those purchased by other unconsolidated joint venture interests:

Joint Venture	Company’s Effective Ownership Percentage			Company- Owned  Square Feet (Millions)		Sales Price (Millions)		Company’s Proportionate Share of Loss (Millions)(A)
Coventry II DDR Ward Parkway		20.0	%		0.4	$	—	$	5.8
Service Holdings (two assets)		20.0	%		0.1		12.7		0.5
DDR Macquarie Fund (eight assets)		14.5	%		1.8		118.3		0.7
DPG Realty Holding (two assets)		10.0	%		0.2		10.1		0.3
					2.5	$	141.1	$	7.3

(A) The Company’s proportionate share of loss was reduced by the impairment charges previously recorded against the Company’s investment in the joint venture.

Acquisitions, Developments, Redevelopments and Expansions

During the year ended December 31, 2009, the Company and its unconsolidated joint ventures expended an aggregate of approximately $635.9 million, net ($331.8 million by the Company, which included the acquisition of assets that were generally in exchange for a partnership interest and did not involve the use of cash, and $304.1 million by its unconsolidated joint ventures), before deducting sales proceeds, to acquire, develop, expand, improve and re-tenant various properties.

At December 31, 2009, approximately $323.7 million of costs were incurred in relation to the Company’s three wholly-owned and consolidated joint venture development projects substantially completed and three projects under construction.

OFF-BALANCE SHEET ARRANGEMENTS

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

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

Unconsolidated Real Estate Ventures	Effective Ownership Percentage(A)			Assets Owned	Company-Owned Square Feet (Millions)		Total Debt (Millions)
DDRTC Core Retail Fund		15.0	%	41 shopping centers in several states		11.6	$	1,182.6
DDR Domestic Retail Fund I		20.0	%	60 shopping centers in several states		8.2		932.1
Sonae Sierra Brazil BV Sarl		33.3	%	10 shopping centers, a management company and three development projects in Brazil		3.8		185.9
DDR — SAU Retail Fund		20.0	%	27 shopping centers in several states		2.4		183.1

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

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Funding for Unconsolidated Joint Ventures

In connection with the development of shopping centers owned by certain affiliates, the Company and/or its equity affiliates have agreed to fund the required capital associated with approved development projects aggregating approximately $2.0 million at December 31, 2011. These obligations, composed principally of construction contracts, are generally due in 12 to 36 months, as the related construction costs are incurred, and are expected to be financed through new or existing construction loans, revolving credit facilities and retained capital.

The Company has provided loans and advances to certain unconsolidated entities and/or related partners in the amount of $71.1 million at December 31, 2011, for which the Company’s joint venture partners have not funded their proportionate share. Included in this amount, the Company advanced $66.9 million of financing to one of its unconsolidated joint ventures, which accrued interest at the greater of LIBOR plus 700 basis points or 12% and a default rate of 16%, and has an initial maturity of July 2011 (the “Bloomfield Loan”). The Company reserved this advance and accrued interest in full in 2009 (see Coventry II Fund discussion below). In addition, the Company guaranteed annual base rental income at certain centers held through Service Holdings, aggregating $2.2 million at December 31, 2011. The Company has not recorded a liability for the guaranty, as the subtenants of Service Holdings are paying rent as due. The Company has recourse against the other parties in the joint venture for their pro rata share of any liability under this guaranty.

Coventry II Fund

At December 31, 2011, the Company maintained several investments with the Coventry II Fund. The Company co-invested approximately 20% in each joint venture and was generally responsible for day-to-day management of the properties through December 31, 2011. The Company’s management and leasing agreements with the joint ventures expired by their own terms on December 31, 2011, and the Company decided not to renew these agreements. For the year ended December 31, 2011, the Company received approximately $2.3 million of gross fees related to the management, development and leasing of these assets. The Company also could earn a promoted interest, along with Coventry Real Estate Advisors L.L.C., above a preferred return after return of capital to fund investors (see Item 3. Legal Proceedings).

As of December 31, 2011, the aggregate carrying amount of the Company’s net investment in the Coventry II Fund joint ventures was approximately $15.8 million. In addition to its existing equity and notes receivable, including the Bloomfield Loan, the Company has provided partial payment guaranties to third-party lenders in connection with the financing for five of the Coventry II Fund projects. The amount of each such guaranty is not greater than the proportion of the Company’s investment percentage in the underlying projects, and the aggregate amount of the Company’s guaranties was approximately $34.2 million at December 31, 2011.

Although the Company will not acquire additional investments through the Coventry II Fund joint ventures, additional funds may be required to address ongoing operational needs and costs associated with the joint ventures undergoing development or redevelopment. The Coventry II Fund is exploring a variety of strategies to obtain such funds, including potential dispositions and financings. The Company continues to maintain the position that it does not intend to fund any of its joint venture partners’ capital contributions or their share of debt maturities. This position led to the Ward Parkway Center in Kansas City, Missouri, being transferred to the lender in 2009. In addition, in 2009 the Company acquired its partner’s 80% interest in the Merriam Village project in Merriam, Kansas, through the assumption and guaranty of $17.0 million face value of debt, of which the Company had previously guaranteed 20%. DDR did not expend any funds for this interest. In connection with DDR’s assumption of an additional guaranty, the lender agreed to modify and extend this secured mortgage.

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

Unconsolidated Real Estate Ventures	Shopping Center or Development Owned	Loan Balance Outstanding at December 31, 2011
Coventry II DDR Bloomfield LLC	Bloomfield Hills, Michigan	$	39.8	(A),(B),(C),(D)
Coventry II DDR Buena Park LLC	Buena Park, California		61.0	(B)
Coventry II DDR Fairplain LLC	Benton Harbor, Michigan		14.9	(B),(E)
Coventry II DDR Marley Creek Square LLC	Orland Park, Illinois		10.6	(D),(E)
Coventry II DDR Montgomery Farm LLC	Allen, Texas		138.2	(B),(E)
Coventry II DDR Phoenix Spectrum LLC	Phoenix, Arizona		65.0
Coventry II DDR Totem Lakes LLC	Kirkland, Washington		27.3	(B),(D),(E)
Coventry II DDR Tri-County LLC	Cincinnati, Ohio		150.6	(B),(C),(D)
Coventry II DDR Westover LLC	San Antonio, Texas		20.3	(B)
Service Holdings LLC	38 retail sites in several states		99.3	(B),(D),(E)

(A) In 2009, the senior secured lender sent to the borrower a formal notice of default and filed a foreclosure action. The Company paid its 20% guaranty of this loan in 2009, and the senior secured lender initiated legal proceedings against the Coventry II Fund for its failure to fund its 80% payment guaranty. The senior secured lender and the Coventry II Fund subsequently entered into a settlement agreement in connection with the legal proceedings. The above-referenced $66.9 million Bloomfield Loan from the Company related to the Bloomfield Hills, Michigan, project is cross-defaulted with this third-party loan. The Bloomfield Loan is considered past due and has been fully reserved by the Company.

(B) As of February 10, 2012, lenders are managing the cash receipts and expenditures related to the assets collateralizing these loans.

(C) As of February 10, 2012, these loans are in default, and the Coventry II Fund is exploring a variety of strategies with the lenders.

(D) The Company has written its investment basis in this joint venture down to zero and is no longer reporting an allocation of income or loss.

(E) As of February 10, 2012, the Company provided partial loan payment guaranties that were not greater than the proportion of its investment interest.

Deconsolidation of Mervyns Joint Venture

The Mervyns Joint Venture owns underlying real estate assets formerly occupied by Mervyns, which declared bankruptcy in 2008 and vacated all sites as of December 31, 2008. The Company owns a 50% interest in the Mervyns Joint Venture, which was previously consolidated by the Company. During the second quarter of 2010, the Company changed its holding period assumptions for this primarily vacant portfolio, as it was no longer committed to providing any additional capital. This triggered the recording of aggregated consolidated impairment charges of approximately $37.6 million on the remaining Mervyns Joint Venture assets, of which the Company’s proportionate share was $16.5 million after adjusting for the allocation of loss to the non-controlling interest. In June 2010, the Mervyns Joint Venture received a notice of default from the servicer for the non-recourse loan secured by all of the remaining former Mervyns stores due to the non-payment of required monthly debt service. In August 2010, a court appointed a third-party receiver to manage and liquidate the remaining former Mervyns sites. Due to the receiver appointment, the Company no longer has the contractual ability to direct the activities that most significantly affect the economic performance of the Mervyns Joint Venture, nor does it have the obligation to absorb losses or receive a benefit from the Mervyns Joint Venture that could potentially be significant to the entity. As a result, in September 2010 the Company deconsolidated the assets and obligations of the Mervyns Joint Venture. Upon deconsolidation, the Company recorded a gain of

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approximately $5.6 million because the carrying value of the non-recourse debt exceeded the carrying value of the collateralized assets of the joint venture. The amount outstanding under the mortgage note payable was $155.7 million upon deconsolidation. The revenues and expenses associated with the Mervyns Joint Venture for all of the periods presented, including the $5.6 million gain, are classified within discontinued operations in the consolidated statements of operations.

Other Joint Ventures

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

The Company’s unconsolidated joint ventures had aggregate outstanding indebtedness to third parties of approximately $3.7 billion and $3.9 billion at December 31, 2011 and 2010, respectively (see Item 7A. Quantitative and Qualitative Disclosures About Market Risk). Such mortgages and construction loans are generally non-recourse to the Company and its partners; however, certain mortgages may have recourse to the Company and its partners in certain limited situations, such as misuse of funds and material misrepresentations. In connection with certain of the Company’s unconsolidated joint ventures, the Company agreed to fund any amounts due to the joint venture’s lender if such amounts are not paid by the joint venture based on the Company’s pro rata share of such amount, which aggregated $41.4 million at December 31, 2011, including guaranties associated with the Coventry II Fund joint ventures.

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

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

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

For the year ended December 31, 2011, $0.6 million of net losses related to the foreign currency-denominated debt agreements were included in the Company’s cumulative translation adjustment. As the notional amount of the non-derivative instrument substantially matches the portion of the net investment designated as being hedged and the non-derivative instrument is denominated in the functional currency of the hedged net investment, the hedge ineffectiveness recognized in earnings was not material.

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FINANCING ACTIVITIES

In January 2012, the Company entered into a $250 million Unsecured Term Loan and a $103.0 million Mortgage Loan. These financings address the majority of the Company’s 2012 consolidated debt maturities and improve debt durations, which further reduces the Company’s risk profile. It is the Company’s expectation that the proceeds from the Unsecured Term Loan will be used to retire the convertible unsecured notes due March 2012. The Unsecured Term Loan consists of a $200 million tranche that bears interest at variable rates based on LIBOR plus 210 basis points with a maturity date of January 2019, and a $50 million tranche that bears interest at variable rates based on LIBOR plus 170 basis points with a maturity date of January 2017. Additionally, the Company entered into interest rate swaps on the $200 million tranche to fix the interest rate at 3.64%. Interest rates on both tranches are subject to adjustments based on the Company’s current unsecured credit rating. The Mortgage Loan bears interest at 3.4% with a maturity date in 2019 and is secured by three prime shopping centers.

In January 2012, the Company entered into forward sale agreements to issue 19.0 million of its common shares at a price of $12.95 per share. The Company expects the settlement of the forward sale agreements to be on or about June 29, 2012. The Company expects to use the net proceeds to fund its investment in the joint venture with an affiliate of Blackstone (see 2012 Strategic Transaction Activity).

As of February 24, 2012, the Company purchased $8.6 million aggregate principal amount of its outstanding 9.625% senior unsecured notes due 2016 at a premium, resulting in a loss of approximately $1.7 million.

The Company has historically accessed capital sources through both the public and private markets. The Company’s acquisitions, developments and redevelopments are generally financed through cash provided from operating activities, revolving credit facilities, mortgages assumed, construction loans, secured debt, unsecured debt, common and preferred equity offerings, joint venture capital and asset sales. Total consolidated debt outstanding was $4.1 billion at December 31, 2011, as compared to $4.3 billion and $5.2 billion at December 31, 2010 and 2009, respectively.

In June 2011, the Company amended its Revolving Credit Facilities. The maturity date was extended from February 2014 to February 2016, and the interest rate was reduced from LIBOR plus 275 basis points to LIBOR plus 165 basis points.

In June 2011, the Company also amended its secured term loan arranged by KeyBank Capital Markets and JP Morgan Securities, LLC, reducing the amount outstanding from $550 million to $500 million. The new facility matures in September 2014 and has a one-year extension option. In addition, the interest rate changed from LIBOR plus 87.5 basis points to LIBOR plus 170 basis points, which represents current competitive pricing.

Debt and equity financings aggregated $3.5 billion during the three years ended December 31, 2011, and are summarized as follows (in millions):

	2011		2010		2009
Equity:
Common shares(A)	$	190.2	$	454.4	$	317.0
Debt:
Unsecured notes(B)		300.0		600.0		300.0
Convertible unsecured notes(C)		—		350.0		—
Construction		15.2		3.4		24.2
Mortgage financing(D)		201.0		—		561.9
Mortgage debt assumed		162.4		—		65.4
Total debt		678.6		953.4		951.5
	$	868.8	$	1,407.8	$	1,268.5

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(A) The Company issued 19.5 million shares, 53.0 million shares and 56.3 million shares in 2011, 2010 and 2009, respectively. Includes the exercise of warrants for 10.0 million shares in 2011.

(B) In March 2011, the Company issued $300 million aggregate principal amount of 4.75% senior unsecured notes due April 2018. In August 2010, the Company issued $300 million aggregate principal amount of 7.875% senior unsecured notes due September 2020. In March 2010, the Company issued $300 million aggregate principal amount of 7.5% senior unsecured notes due April 2017. In September 2009, the Company issued $300 million aggregate principal amount of 9.625% senior unsecured notes due March 2016.

(C) In November 2010, the Company issued 1.75% convertible senior notes due November 2040. Amount represents the face value and excludes the $53.6 million reduction as required by accounting standards due to the initial value of the equity conversion feature. As of December 14, 2011, the notes had a conversion rate of 61.7816 common shares per $1,000 principal amount of the notes, representing a conversion price of $16.19 per common share. The conversion rate is subject to adjustment under certain circumstances.

(D) In November 2009, the Company closed the securitization of a $400 million, five-year loan that was originated in October 2009. The blended interest rate on the loan is 4.225% and was initially secured by a pool of 28 assets (currently 27 assets). The triple-A rated portion of the certification in the securitization constituted “eligible collateral” under the Term Asset-Backed Securities Loan Facility (“TALF”), provided by the Federal Reserve Bank of New York.

CAPITALIZATION

At December 31, 2011, the Company’s capitalization consisted of $4.1 billion of debt, $375 million of preferred shares and $3.4 billion of market equity (market equity is defined as common shares and OP Units outstanding multiplied by $12.17, the closing price of the Company’s common shares on the NYSE at December 31, 2011), resulting in a debt to total market capitalization ratio of 0.52 to 1.0, as compared to the ratios of 0.51 to 1.0 and 0.68 to 1.0 at December 31, 2010 and 2009, respectively. The closing prices of the common shares on the New York Stock Exchange were $14.09 and $9.26 at December 31, 2010 and 2009, respectively. At December 31, 2011, the Company’s total debt consisted of $3.6 billion of fixed-rate debt (including $284.1 million of variable-rate debt that had been effectively swapped to a fixed rate through the use of interest rate derivative contracts) and $0.5 billion of variable rate debt. At December 31, 2010, the Company’s total debt consisted of $3.4 billion of fixed-rate debt (including $150 million of variable-rate debt that had been effectively swapped to a fixed rate through the use of interest rate derivative contracts) and $0.9 billion of variable-rate debt.

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

The Company’s credit facilities and the indentures under which the Company’s senior and subordinated unsecured indebtedness is, or may be, issued contain certain financial and operating covenants, including, among other things, debt service coverage and fixed charge coverage ratios, as well as limitations on the Company’s ability to incur secured and unsecured indebtedness, sell all or substantially all of the Company’s assets and

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engage in mergers and certain acquisitions. Although the Company intends to operate in compliance with these covenants, if the Company were to violate these covenants, the Company may be subject to higher finance costs and fees or accelerated maturities. In addition, certain of the Company’s credit facilities and indentures may permit the acceleration of maturity in the event certain other debt of the Company has been accelerated. Foreclosure on mortgaged properties or an inability to refinance existing indebtedness would have a negative impact on the Company’s financial condition and results of operations.

CONTRACTUAL OBLIGATIONS AND OTHER COMMITMENTS

The Company has debt obligations relating to its revolving credit facilities, term loan, fixed-rate senior notes and mortgages payable with maturities ranging from one to 26 years. In addition, the Company has non-cancelable operating leases, principally for office space and ground leases.

These obligations from continuing operations are summarized as follows for the subsequent five years ending December 31 (in millions):

Contractual Obligations	Total		Less than 1  year			1-3 years		3-5 years		More than 5 years
Debt	$	4,091.2	$	545.9	(A)	$	1,208.9	$	1,006.1	$	1,330.3
Operating leases		139.3		3.6			6.8		7.3		121.6
Total	$	4,230.5	$	549.5		$	1,215.7	$	1,013.4	$	1,451.9

(A) Includes $23.5 million of mortgage debt that was refinanced in January 2012 to 2015 and $33.6 million of mortgage debt that has a one-year extension option.

The Company has loans receivable, including accrued interest, that are collateralized by certain rights in development projects, partnership interests, sponsor guaranties and real estate assets.

The Company had six and eight notes receivable outstanding, with total commitments of up to $100.3 million and $117.0 million, at December 31, 2011 and 2010, respectively, of which approximately $6.0 million and $4.0 million, respectively, was unfunded.

At December 31, 2011, the Company had letters of credit outstanding of approximately $26.5 million. The Company has not recorded any obligations associated with these letters of credit, the majority of which are collateral for existing indebtedness and other obligations of the Company.

In conjunction with the development of shopping centers, the Company had entered into commitments aggregating approximately $24.6 million with general contractors for its wholly-owned and consolidated joint venture properties at December 31, 2011. These obligations, composed principally of construction contracts, are generally due in 12 to 18 months, as the related construction costs are incurred, and are expected to be financed through operating cash flow, new or existing construction loans, asset sales or revolving credit facilities.

Related to one of the Company’s developments in Long Beach, California, an affiliate of the Company has agreed to make an annual payment of approximately $0.6 million to defray a portion of the operating expenses of a parking garage through the earlier of October 2032 or the date when the city’s parking garage bonds are repaid. There are no assets held as collateral or liabilities recorded related to these obligations.

The Company has guaranteed certain special assessment and revenue bonds issued by the Midtown Miami Community Development District. The bond proceeds were used to finance certain infrastructure and parking facility improvements. In the event of a debt service shortfall, the Company is responsible for satisfying the shortfall. There are no assets held as collateral or liabilities recorded related to these guaranties. To date, tax revenues have exceeded the debt service payments for these bonds.

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The Company routinely enters into contracts for the maintenance of its properties. These contracts typically can be cancelled upon 30 to 60 days’ notice without penalty. At December 31, 2011, the Company had purchase order obligations, typically payable within one year, aggregating approximately $3.7 million related to the maintenance of its properties and general and administrative expenses.

The Company has entered into employment contracts with certain executive officers. These contracts generally provide for base salary, bonuses based on factors including the financial performance of the Company and personal performance, participation in the Company’s equity plans, reimbursement of various expenses and health and welfare benefits. They may also provide for certain perquisites (which may include insurance coverage, country or social club expenses or reimbursement for certain business expenses). The contracts for the Company’s President and Chief Executive Officer and other executive officers extend through December 31, 2012 and are subject to cancellation by either the Company or the executive without cause upon at least 90 days’ notice.

INFLATION

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

ECONOMIC CONDITIONS

The retail market in the United States significantly weakened in 2008 and continued to be challenged in 2009. Retail sales declined and tenants became more selective about new store openings. Some retailers closed existing locations, and, as a result, the Company experienced a loss in occupancy compared to its historic levels. The reduction in occupancy in 2009 continued to have a negative impact on the Company’s consolidated cash flows, results of operations and financial position in 2011. However, the Company believes commencing in 2010 there has been an improvement in the level of optimism within its tenant base. Many retailers executed contracts in 2010 and 2011 to open new stores and have strong store opening plans for 2012 and 2013. The lack of supply of new shopping centers is causing retailers to reconsider opportunities to open new stores in quality locations in well-positioned shopping centers. The Company continues to see strong demand from a broad range of retailers, particularly in the off-price sector, which is a reflection of the general outlook of consumers who are demanding more value for their dollars. Offsetting some of the impact resulting from the reduced historical occupancy is the Company’s low occupancy cost relative to other retail formats and historic averages, as well as a diversified tenant base with only one tenant exceeding 3.0% of total 2011 consolidated revenues and the Company’s proportionate share of unconsolidated joint venture revenues (Walmart at 4.3%). Other significant tenants include Target, Lowe’s, Home Depot, Kohl’s, T.J. Maxx/Marshalls, Publix Supermarkets, PetSmart and Bed Bath & Beyond, all of which have relatively strong credit ratings, remain well-capitalized and have outperformed other retail categories on a relative basis over time. The Company believes these tenants should continue providing it with a stable revenue base for the foreseeable future, given the long-term nature of these leases. Moreover, the majority of the tenants in the Company’s shopping centers provide day-to-day consumer necessities with a focus toward value and convenience versus high-priced discretionary luxury items, which the Company believes will enable many of the tenants to continue operating within this challenging economic environment.

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The retail shopping sector has been affected by the competitive nature of the retail business and the competition for market share as well as general economic conditions where stronger retailers have out-positioned some of the weaker retailers. These shifts have forced some market share away from weaker retailers and required them, in some cases, to declare bankruptcy and/or close stores. Overall, the Company believes its portfolio remains stable. However, there can be no assurance that these conditions or events will not adversely affect the Company (see Item 1A. Risk Factors).

Historically, the Company’s portfolio has performed consistently throughout many economic cycles, including downward cycles. Broadly speaking, national retail sales have grown since World War II, including during several recessions and housing slowdowns. In the past, the Company has not experienced significant volatility in its long-term portfolio occupancy rate. The Company has experienced downward cycles before and has made the necessary adjustments to leasing and development strategies to accommodate the changes in the operating environment and mitigate risk. In many cases, the loss of a weaker tenant creates an opportunity to re-lease space at higher rents to a stronger retailer. More importantly, the quality of the property revenue stream is high and consistent, as it is generally derived from retailers with good credit profiles under long-term leases, with very little reliance on overage rents generated by tenant sales performance. The Company believes that the quality of its shopping center portfolio is strong, as evidenced by the high historical occupancy rates, which have generally ranged from 92% to 96% since the Company’s initial public offering in 1993. Although the Company experienced a significant decline in occupancy in 2009 due to several major tenant bankruptcies, the shopping center portfolio occupancy was at 89.1% at December 31, 2011. Notwithstanding the decline in occupancy compared to historic levels, the Company continues to sign new leases at rental rates that are returning to historic averages. The total portfolio average annualized base rent per occupied square foot, including the results of Sonae Sierra Brasil, was $13.81 at December 31, 2011, as compared to $13.30 at December 31, 2010. Moreover, the Company has been able to achieve these results without significant capital investment in tenant improvements or leasing commissions. The weighted-average cost of tenant improvements and lease commissions estimated to be incurred for leases executed during 2011 for the U.S. portfolio was only $2.62 per rentable square foot. The Company is very conscious of, and sensitive to, the risks posed by the economy, but believes that the position of its portfolio and the general diversity and credit quality of its tenant base should enable it to successfully navigate through these challenging economic times.

NEW ACCOUNTING STANDARDS

New Accounting Standards Implemented

Presentation of Other Comprehensive Income

In June 2011, the Financial Accounting Standard Board (“FASB”) issued guidance on the presentation of comprehensive income. This guidance eliminates the option to present the components of other comprehensive income as part of the consolidated statements of equity, which was the Company’s previous presentation, and requires presentation of reclassification adjustments from other comprehensive income to net income on the face of the financial statements. This presentation was adopted by the Company at December 31, 2011. In December 2011, the FASB deferred only those changes in the guidance that relate to the presentation of reclassification adjustments out of accumulated other comprehensive income. These provisions are effective in fiscal years beginning after December 15, 2011. When adopted, the guidance is not expected to materially impact the Company’s consolidated financial statements.

New Accounting Standards to be Implemented

Fair Value Measurements

In May 2011, the FASB issued Accounting Standards Update No. 2011-04, Fair Value Measurements and Disclosures (Topic 820) — Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRS (“ASU 2011-04”). ASU 2011-04 clarifies the application of existing fair value measurement requirements, changes certain principles related to measuring fair value and requires additional disclosures about fair value measurements. Specifically, the guidance specifies that the concepts of

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highest and best use and valuation premise in a fair value measurement are only relevant when measuring the fair value of nonfinancial assets whereas they are not relevant when measuring the fair value of financial assets and liabilities. Required disclosures are expanded under the new guidance, especially for fair value measurements that are categorized within Level 3 of the fair value hierarchy, for which quantitative information about the unobservable inputs used, and a narrative description of the valuation processes in place and sensitivity of recurring Level 3 measurements to changes in unobservable inputs will be required. Entities will also be required to disclose the categorization by level of the fair value hierarchy for items that are not measured at fair value in the balance sheet but for which the fair value is required to be disclosed. ASU 2011-04 is effective for annual periods beginning after December 15, 2011, and is to be applied prospectively. The Company does not expect the adoption of this guidance will have a material impact, if any, on its financial statements.

Derecognition of in Substance Real Estate

In November 2011, the FASB ratified the EITF consensus, ASU 2011-10, Derecognition of in Substance Real Estate — a Scope Clarification. This guidance clarifies that ASC 360-20, Property Plant and Equipment — Real Estate Sales (“ASC 360-20”) is the authoritative guidance when an investor loses control of real estate to a lender as a result of defaulting on a loan. Therefore, the investor is precluded from derecognizing the real estate until legal ownership has been transferred to the lender. The accounting for this fact pattern was addressed by the EITF due to diversity in practice. Under the Company’s historical accounting policies, it believed that it no longer had the contractual ability to direct the activities that most significantly affected the economic performance of entities in receivership. Therefore, the Company’s historical accounting policy for evaluating receivership transactions is based upon ASC 810. This EITF will be effective prospectively for fiscal years beginning on or after June 15, 2012 (i.e., fiscal year 2013 for the Company). The Company will apply this consensus on a prospective basis on the effective date.

FORWARD-LOOKING STATEMENTS

Management’s discussion and analysis should be read in conjunction with the consolidated financial statements and the notes thereto appearing elsewhere in this report. Historical results and percentage relationships set forth in the consolidated financial statements, including trends that might appear, should not be taken as indicative of future operations. The Company considers portions of this information to be “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, both as amended, with respect to the Company’s expectations for future periods. Forward-looking statements include, without limitation, statements related to acquisitions (including any related pro forma financial information) and other business development activities, future capital expenditures, financing sources and availability and the effects of environmental and other regulations. Although the Company believes that the expectations reflected in these forward-looking statements are based upon reasonable assumptions, it can give no assurance that its expectations will be achieved. For this purpose, any statements contained herein that are not statements of historical fact should be deemed to be forward-looking statements. Without limiting the foregoing, the words “will,” “believes,” “anticipates,” “plans,” “expects,” “seeks,” “estimates” and similar expressions are intended to identify forward-looking statements. Readers should exercise caution in interpreting and relying on forward-looking statements because such statements involve known and unknown risks, uncertainties and other factors that are, in some cases, beyond the Company’s control and that could cause actual results to differ materially from those expressed or implied in the forward-looking statements and that could materially affect the Company’s actual results, performance or achievements. For additional factors that could cause the results of the Company to differ materially from those indicated in the forward looking statements, please refer to Item 1A – Risk Factors included elsewhere in this report.

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

• The Company is subject to general risks affecting the real estate industry, including the need to enter into new leases or renew leases on favorable terms to generate rental revenues, and the economic

49

downturn may adversely affect the ability of the Company’s tenants, or new tenants, to enter into new leases or the ability of the Company’s existing tenants to renew their leases at rates at least as favorable as their current rates;

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

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

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

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

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

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

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

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

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

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

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

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

50

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

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

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

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

• The Company’s decision to dispose of real estate assets, including land held for development and construction in progress, would change the holding period assumption in the undiscounted cash flow impairment analyses, which could result in material impairment losses and adversely affect the Company’s financial results;

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

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

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

^¡   Adverse effects of changes in exchange rates for foreign currencies;

^¡   Changes in foreign political or economic environments;

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

^¡   Different lending practices;

^¡   Cultural and consumer differences;

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

^¡   Difficulties in managing international operations; and

^¡   Obstacles to the repatriation of earnings and cash.

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

• The Company is subject to potential environmental liabilities;

51

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

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

• The joint venture between an affiliate of the Company and an affiliate of Blackstone may be unable to successfully complete the planned acquisition of a portfolio of 46 shopping centers from EPN.

ITEM 7A.    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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

	December 31, 2011										December 31, 2010
	Amount (Millions)		Weighted- Average Maturity (Years)		Weighted- Average Interest Rate			Percentage of Total			Amount (Millions)		Weighted- Average Maturity (Years)		Weighted- Average Interest Rate			Percentage of Total
Fixed-Rate Debt(A)	$	3,571.2		4.3		6.1	%		87.0	%	$	3,428.1		4.3		6.3	%		79.7	%
Variable-Rate Debt(A)	$	533.4		3.6		2.1	%		13.0	%	$	873.9		1.7		2.3	%		20.3	%

(A) Adjusted to reflect the $284.1 million and $150 million of variable-rate debt that LIBOR was swapped to at a fixed-rate of 2.9% and 3.4% at December 31, 2011 and 2010, respectively.

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

	December 31, 2011									December 31, 2010
	Joint Venture Debt (Millions)		Company’s Proportionate Share (Millions)		Weighted- Average Maturity (Years)		Weighted- Average Interest Rate			Joint Venture Debt (Millions)		Company’s Proportionate Share (Millions)		Weighted- Average Maturity (Years)		Weighted- Average Interest Rate
Fixed-Rate Debt	$	3,086.1	$	646.2		3.6		5.7	%	$	3,279.1	$	705.3		4.1		5.6	%
Variable-Rate Debt	$	656.1	$	126.7		3.8		5.7	%	$	661.5	$	128.5		1.8		4.0	%

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

The interest rate risk on a portion of the Company’s variable-rate debt described above has been mitigated through the use of interest rate swap agreements (the “Swaps”) with major financial institutions. At December 31, 2011 and 2010, the interest rate on the Company’s $284.1 million and $150 million, respectively, consolidated floating rate debt was swapped to fixed rates. The Company is exposed to credit risk in the event of nonperformance by the counterparties to the Swaps. The Company believes it mitigates its credit risk by entering into Swaps with major financial institutions.

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

52

The carrying value of the Company’s fixed-rate debt is adjusted to include the $284.1 million and $150 million that were swapped to a fixed rate at December 31, 2011 and 2010, respectively. The fair value of the Company’s fixed-rate debt is adjusted to (i) include the swaps reflected in the carrying value and (ii) include the Company’s proportionate share of the joint venture fixed-rate debt. An estimate of the effect of a 100 basis-point increase at December 31, 2011 and 2010, is summarized as follows (in millions):

	December 31, 2011								December 31, 2010
	Carrying Value		Fair Value			100 Basis- Point Increase in Market Interest Rates			Carrying Value		Fair Value			100 Basis- Point Increase in Market Interest Rates
Company’s fixed-rate debt	$	3,571.2	$	3,757.9	(A)	$	3,690.5	(B)	$	3,428.1	$	3,647.2	(A)	$	3,527.0	(B)
Company’s proportionate share of joint venture fixed-rate debt	$	646.2	$	633.2		$	617.0		$	705.3	$	689.3		$	670.3

(A) Includes the fair value of interest rate swaps, which was a liability of $8.8 million and $5.2 million at December 31, 2011 and 2010, respectively.

(B) Includes the fair value of interest rate swaps, which was a liability of $1.9 million and $3.1 million at December 31, 2011 and 2010, respectively.

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

Further, a 100 basis-point increase in short-term market interest rates on variable-rate debt at December 31, 2011, would result in an increase in interest expense of approximately $6.2 million for the Company and $1.3 million representing the Company’s proportionate share of the joint ventures’ interest expense relating to variable-rate debt outstanding for the 12-month period. The estimated increase in interest expense for the year does not give effect to possible changes in the daily balance for the Company’s or joint ventures’ outstanding variable-rate debt.

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

53

DDR Corp.

INDEX TO FINANCIAL STATEMENTS

	Page
Financial Statements:
Report of Independent Registered Public Accounting Firm		F-2
Consolidated Balance Sheets at December 31, 2011 and 2010		F-3
Consolidated Statements of Operations for the three years ended December 31, 2011		F-4
Consolidated Statements of Comprehensive (Loss) Income for the three years ended December 31, 2011		F-5
Consolidated Statements of Equity for the three years ended December 31, 2011		F-6
Consolidated Statements of Cash Flows for the three years ended December 31, 2011		F-7
Notes to Consolidated Financial Statements		F-8

F-1

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Shareholders of DDR Corp.:

In our opinion, the consolidated financial statements listed in the accompanying index present fairly, in all material respects, the financial position of DDR Corp, and its subsidiaries at December 31, 2011 and 2010, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2011 in conformity with accounting principles generally accepted in the United States of America. In addition, in our opinion, the financial statement schedules appearing under Item 15(a)(2) of the Company’s 2011 Annual Report on Form 10-K present fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2011, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The Company’s management is responsible for these financial statements and financial statement schedules, for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in “Management’s Report on Internal Control over Financial Reporting” (not presented herein) appearing under Item 9A of the Company’s 2011 Annual Report on Form 10-K. Our responsibility is to express opinions on these financial statements, on the financial statement schedules, and on the Company’s internal control over financial reporting based on our integrated audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the financial statements included examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

As discussed in Note 1 to the consolidated financial statements, the Company changed the manner in which it assesses consolidation principles for variable interest entities in 2010.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/PricewaterhouseCoopers LLP

Cleveland, Ohio

February 28, 2012, except with respect to our opinion on the consolidated financial statements in so far as it relates to the effects of the discontinued operations as discussed in Note 20, as to which the date is October 1, 2012.

F-2

CONSOLIDATED BALANCE SHEETS

(In thousands, except share amounts)

	December 31,
	2011			2010
Assets
Land	$	1,844,125		$	1,837,403
Buildings		5,461,122			5,491,489
Fixtures and tenant improvements		379,965			339,129
		7,685,212			7,668,021
Less: Accumulated depreciation		(1,550,066	)		(1,452,112	)
		6,135,146			6,215,909
Land held for development and construction in progress		581,627			743,218
Real estate held for sale, net		2,290			—
Total real estate assets, net		6,719,063			6,959,127
Investments in and advances to joint ventures		353,907			417,223
Cash and cash equivalents		41,206			19,416
Restricted cash		30,983			28,139
Accounts receivable, net		117,463			123,259
Notes receivable, net		93,905			120,330
Deferred charges, less accumulated amortization of $27,848 and $25,446, respectively		45,272			44,988
Other assets, net		67,626			55,608
	$	7,469,425		$	7,768,090
Liabilities and Equity
Unsecured indebtedness:
Senior notes	$	2,139,718		$	2,043,582
Revolving credit facilities		142,421			279,865
		2,282,139			2,323,447
Secured indebtedness:
Term loan		500,000			600,000
Mortgage and other secured indebtedness		1,322,445			1,378,553
		1,822,445			1,978,553
Total indebtedness		4,104,584			4,302,000
Accounts payable and other liabilities		257,821			223,074
Dividends payable		29,128			12,092
Equity derivative liability — affiliate		—			96,237
		4,391,533			4,633,403
Commitments and contingencies (Note 9)
DDR Equity:
Preferred shares (Note 10)		375,000			555,000
Common shares, with par value, $0.10 stated value; 500,000,000 shares authorized; 277,114,784 and 256,267,750 shares issued at December 31, 2011 and 2010, respectively		27,711			25,627
Paid-in capital		4,138,812			3,868,990
Accumulated distributions in excess of net income		(1,493,353	)		(1,378,341	)
Deferred compensation obligation		13,934			14,318
Accumulated other comprehensive income		(1,403	)		25,646
Less: Common shares in treasury at cost: 833,934 and 712,310 shares at December 31, 2011 and 2010, respectively		(15,017	)		(14,638	)
Total DDR shareholders’ equity		3,045,684			3,096,602
Non-controlling interests		32,208			38,085
Total equity		3,077,892			3,134,687
	$	7,469,425		$	7,768,090

The accompanying notes are an integral part of these consolidated financial statements.

F-3

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share amounts)

	For the Year Ended December 31,
	2011			2010			2009
Revenues from operations:
Minimum rents	$	501,183			493,404		$	485,333
Percentage and overage rents		6,122			5,497			6,743
Recoveries from tenants		163,879			162,921			161,613
Fee and other income		82,749			84,540			84,893
		753,933			746,362			738,582
Rental operation expenses:
Operating and maintenance		130,007			124,318			120,988
Real estate taxes		97,997			99,491			93,083
Impairment charges		67,912			84,855			12,245
General and administrative		85,221			85,573			94,365
Depreciation and amortization		216,820			203,825			194,311
		597,957			598,062			514,992
Other income (expense):
Interest income		9,832			7,302			11,966
Interest expense		(225,113	)		(210,587	)		(206,890	)
(Loss) gain on debt retirement, net		(89	)		485			145,050
Gain (loss) on equity derivative instruments		21,926			(40,157	)		(199,797	)
Other income (expense), net		(5,002	)		(24,156	)		(28,894	)
		(198,446	)		(267,113	)		(278,565	)
Loss before earnings from equity method investments and other items		(42,470	)		(118,813	)		(54,975	)
Equity in net income (loss) of joint ventures		13,734			5,600			(9,733	)
Impairment of joint venture investments		(2,921	)		(227	)		(184,584	)
Gain on change in control of interests and sale of interests		25,170			—			23,865
Loss before tax (expense) benefit of taxable REIT subsidiaries and state franchise and income taxes		(6,487	)		(113,440	)		(225,427	)
Tax (expense) benefit of taxable REIT subsidiaries and state franchise and income taxes		(1,028	)		(47,945	)		890
Loss from continuing operations		(7,515	)		(161,385	)		(224,537	)
Loss from discontinued operations		(18,961	)		(87,654	)		(188,230	)
Loss before gain on disposition of real estate		(26,476	)		(249,039	)		(412,767	)
Gain on disposition of real estate, net of tax		7,079			1,318			9,127
Net loss	$	(19,397	)	$	(247,721	)	$	(403,640	)
Non-controlling interests		3,543			38,363			47,047
Net loss attributable to DDR	$	(15,854	)	$	(209,358	)	$	(356,593	)
Write-off of preferred share original issuance costs		(6,402	)		—			—
Preferred dividends		(31,587	)		(42,269	)		(42,269	)
Net loss attributable to DDR common shareholders	$	(53,843	)	$	(251,627	)	$	(398,862	)
Per share data:
Basic earnings per share data:
Loss from continuing operations attributable to DDR common shareholders	$	(0.13	)	$	(0.78	)	$	(1.63	)
Loss from discontinued operations attributable to DDR common shareholders		(0.07	)		(0.25	)		(0.88	)
Net loss attributable to DDR common shareholders	$	(0.20	)	$	(1.03	)	$	(2.51	)
Diluted earnings per share data:
Loss from continuing operations attributable to DDR common shareholders	$	(0.21	)	$	(0.78	)	$	(1.63	)
Loss from discontinued operations attributable to DDR common shareholders		(0.07	)		(0.25	)		(0.88	)
Net loss attributable to DDR common shareholders	$	(0.28	)	$	(1.03	)	$	(2.51	)

The accompanying notes are an integral part of these consolidated financial statements.

F-4

CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME

(In thousands)

	For the Year Ended December 31,
	2011			2010			2009
Net loss	$	(19,397	)	$	(247,721	)	$	(403,640	)
Other comprehensive (loss) income:
Foreign currency translation		(21,527	)		3,588			47,146
Change in fair value of interest-rate contracts		(5,978	)		10,261			15,664
Amortization of interest-rate contracts		56			(430	)		(373	)
Total other comprehensive (loss) income		(27,449	)		13,419			62,437
Comprehensive loss	$	(46,846	)	$	(234,302	)	$	(341,203	)
Comprehensive loss attributable to non-controlling interests:
Allocation of net loss		3,543			38,363			47,047
Foreign currency translation		400			2,678			(3,039	)
Total comprehensive loss attributable to non-controlling interests		3,943			41,041			44,008
Total comprehensive loss attributable to DDR	$	(42,903	)	$	(193,261	)	$	(297,195	)

The accompanying notes are an integral part of these consolidated financial statements.

F-5

CONSOLIDATED STATEMENTS OF EQUITY

(In thousands, except share amounts)

	DDR Corp.
	Preferred Shares			Common Shares		Paid-in Capital			Accumulated Distributions in Excess of Net Income (Loss)			Deferred Compensation Obligation			Accumulated Other Comprehensive Income (Loss)			Treasury Stock at Cost			Non- Controlling Interests			Total
Balance, December 31, 2008	$	555,000		$	12,864	$	2,849,364		$	(635,239	)	$	13,882		$	(49,849	)	$	(8,731	)	$	127,503		$	2,864,794
Issuance of 261,580 common shares related to related to stock plans		—			16		795			—			—			—			362			—			1,173
Issuance of 56,630,606 common shares for cash		—			5,656		311,140			—			—			—			709			—			317,505
Equity derivative instruments		—			—		143,716			—			—			—			—			—			143,716
Issuance of restricted stock		—			194		1,069			—			3,045			—			(629	)		—			3,679
Vesting of restricted stock		—			—		6,554			—			911			—			(7,577	)		—			(112	)
Stock-based compensation		—			—		12,813			—			—			—			—			—			12,813
Contributions from non-controlling interests		—			—		—			—			—			—			—			8,271			8,271
Distributions to non-controlling interests		—			—		—			—			—			—			—			(1,992	)		(1,992	)
Dividends declared-common shares		—			1,444		49,077			(64,560	)		—			—			—			—			(14,039	)
Dividends declared-preferred shares		—			—		—			(42,269	)		—			—			—			—			(42,269	)
Comprehensive loss		—			—		—			(356,593	)		—			59,398			—			(44,008	)		(341,203	)
Balance, December 31, 2009		555,000			20,174		3,374,528			(1,098,661	)		17,838			9,549			(15,866	)		89,774			2,952,336
Cumulative effect of adoption of a new accounting standard (Note 1)		—			—		—			(7,848	)		—			—			—			(12,384	)		(20,232	)
Deconsolidation of interests		—			—		—			—			—			—			—			3,876			3,876
Issuance of 212,349 common shares related to related to stock plans		—			21		1,232			—			—			—			109			—			1,362
Issuance of 52,792,716 common shares for cash		—			5,279		433,473			—			—			—			1,678			—			440,430
Convertible debt instruments		—			—		52,497			—			—			—			—			—			52,497
Issuance of restricted stock		—			153		(199	)		—			741			—			(1,542	)		—			(847	)
Vesting of restricted stock		—			—		4,761			—			(4,261	)		—			983			—			1,483
Stock-based compensation		—			—		2,698			—			—			—			—			—			2,698
Contributions from non-controlling interests		—			—		—			—			—			—			—			746			746
Distributions to non-controlling interests		—			—		—			—			—			—			—			(2,886	)		(2,886	)
Dividends declared-common shares		—			—		—			(20,205	)		—			—			—			—			(20,205	)
Dividends declared-preferred shares		—			—		—			(42,269	)		—			—			—			—			(42,269	)
Comprehensive loss		—			—		—			(209,358	)		—			16,097			—			(41,041	)		(234,302	)
Balance, December 31, 2010		555,000			25,627		3,868,990			(1,378,341	)		14,318			25,646			(14,638	)		38,085			3,134,687
Issuance of 178,081 common shares related to stock plans		—			18		979			—			—			—			432			—			1,429
Issuance of 10,000,000 common shares related to exercise of warrants		—			1,000		133,310			—			—			—			—			—			134,310
Issuance of 9,500,000 common shares for cash offering		—			950		128,715			—			—			—			—			—			129,665
Issuance of restricted stock		—			116		(6,357	)		—			530			—			6,238			—			527
Vesting of restricted stock		—			—		2,985			—			(914	)		—			(7,049	)		—			(4,978	)
Stock-based compensation		—			—		3,788			—			—			—			—			—			3,788
Contributions from non-controlling interests		—			—		—			—			—			—			—			374			374
Distributions to non-controlling interests		—			—		—			—			—			—			—			(2,308	)		(2,308	)
Redemption of preferred shares		(180,000	)		—		6,402			(6,402	)		—			—			—			—			(180,000	)
Dividends declared-common shares		—			—		—			(60,527	)		—			—			—			—			(60,527	)
Dividends declared-preferred shares		—			—		—			(32,229	)		—			—			—			—			(32,229	)
Comprehensive loss		—			—		—			(15,854	)		—			(27,049	)		—			(3,943	)		(46,846	)
Balance, December 31, 2011	$	375,000		$	27,711	$	4,138,812		$	(1,493,353	)	$	13,934		$	(1,403	)	$	(15,017	)	$	32,208		$	3,077,892

The accompanying notes are an integral part of these consolidated financial statements.

F-6

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

	For the Year Ended December 31,
	2011			2010			2009
Cash flow from operating activities:
Net loss	$	(19,397	)	$	(247,721	)	$	(403,640	)
Adjustments to reconcile net loss to net cash flow provided by operating activities:
Depreciation and amortization		230,332			227,304			233,967
Stock-based compensation		7,439			6,459			20,398
Amortization of deferred finance costs and settled interest rate protection agreements		14,737			13,269			10,894
Accretion of convertible debt discount		14,914			8,204			12,238
Loss (gain) on debt retirement, net		89			(485	)		(145,050	)
(Gain) loss on equity derivative instruments		(21,926	)		40,157			199,797
Settlement of accreted debt discount on repurchase of senior convertible notes		(9,937	)		(8,358	)		(17,560	)
Net cash paid from interest rate hedging contracts		(2,285	)		—			—
Equity in net (income) loss of joint ventures		(13,734	)		(5,600	)		9,733
Impairment of joint venture investments		2,921			227			184,584
Net gain on change in control of interests and sale of interests		(29,886	)		(5,221	)		(23,865	)
Gain on sale of joint venture stock		—			—			(2,824	)
Cash distributions from joint ventures		9,424			7,334			10,889
(Gain) loss on disposition of real estate		(47,242	)		(7,093	)		14,900
Impairment charges and loan loss reserves		130,844			171,900			160,112
Change in notes receivable interest reserve		(1,784	)		(3,005	)		(9,683	)
Change in restricted cash		(4,317	)		(10,876	)		(12,980	)
Net change in accounts receivable		7,358			21,045			13,902
Net change in accounts payable and accrued expenses		1,760			4,323			(11,691	)
Net change in other operating assets and liabilities		3,885			66,261			(15,186	)
Total adjustments		292,592			525,845			632,575
Net cash flow provided by operating activities		273,195			278,124			228,935
Cash flow from investing activities:
Proceeds from disposition of real estate		344,231			156,374			348,176
Real estate developed or acquired, net of liabilities assumed		(217,861	)		(164,391	)		(208,768	)
Equity contributions to joint ventures		(7,719	)		(30,311	)		(28,115	)
Repayments (issuances) of joint venture advances, net		22,378			442			(1,650	)
Distributions of proceeds from sale and refinancing of joint venture interests		21,911			24,339			7,442
Return of investments in joint ventures		9,466			22,094			19,565
Issuance of notes receivable		(10,000	)		(62,958	)		(1,885	)
Repayment of notes receivable		33,208			—			—
Decrease in restricted cash — capital improvements		5,082			86,173			16,119
Net cash flow provided by investing activities		200,696			31,762			150,884
Cash flow from financing activities:
Repayments of revolving credit facilities, net		(138,098	)		(492,224	)		(270,692	)
Proceeds from issuance of senior notes, net of underwriting commissions and offering expenses of $350, $1,183 and $200 in 2011, 2010 and 2009, respectively		295,495			933,370			294,685
Repayment of senior notes		(207,858	)		(541,606	)		(854,720	)
Proceeds from mortgages and other secured debt		186,956			23,686			699,221
Repayment of term loans and mortgage debt		(499,767	)		(601,678	)		(497,632	)
Payment of debt issuance costs		(13,993	)		(13,773	)		(20,634	)
Redemption of preferred shares		(180,000	)		—			—
Proceeds from issuance of common shares, net of underwriting commissions and offering expenses of $835, $998 and $459 in 2011, 2010 and 2009, respectively		129,684			440,430			317,505
Proceeds from issuance of common shares related to the exercise of warrants		59,978			—			—
Purchase of common shares in conjunction with equity award plans		(6,655	)		(1,763	)		(3,079	)
Contributions from non-controlling interests		374			746			8,271
Distributions to non-controlling interests and redeemable operating partnership units		(2,250	)		(2,886	)		(1,984	)
Dividends paid		(75,720	)		(61,367	)		(52,289	)
Net cash used for financing activities		(451,854	)		(317,065	)		(381,348	)
Cash and cash equivalents
Increase (decrease) in cash and cash equivalents		22,037			(7,179	)		(1,529	)
Effect of exchange rate changes on cash and cash equivalents		(247	)		423			(1,793	)
Cash and cash equivalents, beginning of year		19,416			26,172			29,494
Cash and cash equivalents, end of year	$	41,206		$	19,416		$	26,172

The accompanying notes are an integral part of these consolidated financial statements.

F-7

Notes to Consolidated Financial Statements

1.    Summary of Significant Accounting Policies

Nature of Business

DDR Corp. and its related real estate joint ventures and subsidiaries (collectively, the “Company” or “DDR”) are primarily engaged in the business of acquiring, expanding, owning, developing, redeveloping, leasing, managing and operating shopping centers. Unless otherwise provided, references herein to the Company or DDR include DDR Corp., its wholly-owned and majority-owned subsidiaries and its consolidated and unconsolidated joint ventures. The tenant base primarily includes national and regional retail chains and local retailers. Consequently, the Company’s credit risk is concentrated in the retail industry.

Use of Estimates in Preparation of Financial Statements

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

Reclassifications

Certain reclassifications have been made to the 2010 financial statements to conform to the 2011 presentation.

Principles of Consolidation

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

At December 31, 2011 and 2010, the Company’s investments in consolidated real estate joint ventures in which the Company is deemed to be the primary beneficiary have total real estate assets of $289.5 million and $374.2 million, respectively, mortgages of $23.5 million and $42.9 million, respectively, and other liabilities of $28.7 million and $13.7 million, respectively.

The Company deconsolidates its interest in consolidated joint venture entities or assets, which the Company considers in-substance real estate, when it no longer possesses a controlling financial interest in the entity. In 2011 and 2010, the Company had consolidated joint ventures that transferred their interest in the real estate to the control of a court-appointed receiver. As a result, the Company no longer had a controlling financial interest in the entity. Consequently, the entities were deconsolidated as the Company was no longer in control (see New Accounting Pronouncements to be Implemented below.) Following the appointment of the receiver, the Company no longer had any effective economic rights or obligations in these entities. Subsequent to the deconsolidation of these joint ventures, the Company accounts for its retained interest in these joint venture investments, which approximates zero at December 31, 2011, under the cost method of accounting because the Company does not have the ability to exercise significant influence. Upon deconsolidation, the Company recorded approximately $4.7 million and $5.6 million for the years ended December 31, 2011 and 2010, respectively, as Gain on Deconsolidation of Interests because the carrying value of the non-recourse debt exceeded the carrying value of the collateralized assets of the joint ventures.

F-8

The revenues and expenses associated with the entities for all of the periods presented, including the Gain on Deconsolidation of Interests, are classified within discontinued operations in the consolidated statements of operations (Note 12).

The Company had a 50% interest in one real estate project (the “Deconsolidated Land Entity”), which consisted primarily of land under development. As a result of the initial application of ASC 810, at December 31, 2009, the Company recorded its retained interest in the Deconsolidated Land Entity at its carrying amount. The difference between the net amount removed from the balance sheet of the Deconsolidated Land Entity and the amount reflected in Investments in and Advances to Joint Ventures of approximately $7.8 million was recognized as a cumulative effect adjustment to accumulated distributions in excess of net income. This difference was primarily due to the recognition of an other than temporary impairment charge that would have been recorded had ASC 810 been effective in 2008. In 2011, the Company sold its interest in the Deconsolidated Land Entity.

Statement of Cash Flows and Supplemental Disclosure of Non-Cash Investing and Financing Information

Non-cash investing and financing activities are summarized as follows (in millions):

	For the Year Ended December 31,
	2011		2010		2009
Mortgages and liabilities assumed from acquisitions	$	137.8	$	—	$	—
Consolidation of the net assets (excluding mortgages as disclosed below) of previously unconsolidated joint ventures		87.8		—		136.6
Mortgages assumed of previously unconsolidated joint ventures		50.1		—		82.8
Deconsolidation of net assets from the adoption of ASC 810		—		20.2		—
Reduction of non-controlling interests from the adoption of ASC 810		—		12.4		—
Deconsolidation of net assets		5.0		15.2		—
Reduction of non-controlling interests due to deconsolidation of Mervyns Joint Venture		—		3.9		—
Foreclosure of note receivable and transfer of collateral		—		19.0		—
Equity derivative liability — affiliate		74.3		—
Dividends declared, not paid		29.1		12.1		11.0
Dividends paid in common shares		—		—		50.8
Redemption of interest in a joint venture		—		—		(27.9	)

The transactions above did not provide or use cash in the years presented and, accordingly, are not reflected in the consolidated statements of cash flows.

Real Estate

Real estate assets, which includes construction in progress and land held for development, are stated at cost less accumulated depreciation.

Depreciation and amortization is recorded on a straight-line basis over the estimated useful lives of the assets as follows:

Buildings	Useful lives, 31.5 years
Building improvements	Useful lives, ranging from 5 to 20 years
Fixtures and tenant improvements	Useful lives, which approximate lease terms, where applicable

F-9

The Company periodically assesses the useful lives of its depreciable real estate assets and accounts for any revisions, which are not material for the periods presented, prospectively. Expenditures for maintenance and repairs are charged to operations as incurred. Significant expenditures that improve or extend the life of the asset are capitalized.

Land held for development and construction in progress includes land held for future development, shopping center developments and expansions. The Company capitalized certain direct and incremental internal construction and software development and implementation costs of $9.1 million, $9.7 million and $11.7 million in 2011, 2010 and 2009, respectively.

Purchase Price Accounting

Upon acquisition of properties, the Company estimates the fair value of acquired tangible assets, consisting of land, building and improvements and intangible assets generally consisting of: (i) above- and below-market leases, (ii) in-place leases and (iii) tenant relationships. The Company allocates the purchase price to assets acquired and liabilities assumed on a gross basis based on their relative fair values at the date of acquisition. In estimating the fair value of the tangible and intangible assets acquired, the Company considers information obtained about each property as a result of its due diligence, marketing and leasing activities and uses various valuation methods, such as estimated cash flow projections using appropriate discount and capitalization rates, analysis of recent comparable sales transactions, estimates of replacement costs net of depreciation and other available market information. Above- and below-market lease values are recorded based on the present value (using a discount rate that reflects the risks associated with the leases acquired) of the difference between (i) the contractual amounts to be paid pursuant to each in-place lease and (ii) management’s estimate of fair market lease rates for each corresponding in-place lease, measured over a period equal to the remaining term of the lease for above-market leases and the initial term plus the estimated term of any below-market fixed-rate renewal options for below-market leases. The capitalized above-market lease values are amortized as a reduction of base rental revenue over the remaining term of the respective leases, and the capitalized below-market lease values are amortized as an increase to base rental revenue over the remaining initial terms plus the estimated terms of any below-market fixed-rate renewal options of the respective leases. The purchase price is further allocated to in-place lease values and tenant relationship values based on management’s evaluation of the specific characteristics of the acquired lease portfolio and the Company’s overall relationship with anchor tenants. Such amounts are amortized to depreciation and amortization expense over the weighted average remaining initial term (and expected renewal periods for tenant relationships). The fair value of the tangible assets of an acquired property considers the value of the property as if it were vacant.

Intangible assets associated with property acquisitions are included in other assets and other liabilities, as appropriate, in the Company’s consolidated balance sheets. In the event a tenant terminates its lease prior to the contractual expiration, the unamortized portion of the related intangible asset or liability is written off. At December 31, 2011 and 2010, below-market leases aggregated a net liability of $37.0 million and $22.8 million, respectively. At December 31, 2011 and 2010, above-market leases aggregated a net asset of $7.8 million and $6.4 million, respectively. The estimated future amortization income, net, associated with the Company’s above- and below-market leases, is $2.4 million, $2.7 million, $2.8 million, $2.8 million and $2.9 million for the years ending December 31, 2012, 2013, 2014, 2015 and 2016, respectively.

Real Estate Impairment Assessment

The Company reviews its individual real estate assets, including land held for development and construction in progress, for potential impairment indicators whenever events or changes in circumstances indicate that the carrying value may not be recoverable. Impairment indicators include, but are not limited to, significant decreases in real estate property projected net operating income and occupancy percentages, projected losses on potential future sales, significant changes in projected completion dates, development costs, market factors and sustainability of development projects. An asset is considered impaired when the undiscounted future cash flows are not sufficient to recover the asset’s carrying value.

F-10

The determination of anticipated undiscounted cash flows is inherently subjective and requires significant estimates made by management and considers the most likely expected course of action at the balance sheet date based on current plans, intended holding periods and available market information. If the Company’s estimates of the projected future cash flows, anticipated holding periods or market conditions change, its evaluation of impairment losses may be different, and such differences could be material to the consolidated financial statements. Plans to hold properties over longer periods decrease the likelihood of recording impairment losses. If the Company is evaluating the potential sale of an asset or land held for development, the undiscounted future cash flows analysis is probability weighted based upon management’s best estimate of the likelihood of the alternative courses of action as of the balance sheet date. If such impairment is present, an impairment loss is recognized based on the excess of the carrying amount of the asset over its fair value. The Company recorded aggregate impairment charges, including those classified within discontinued operations, of approximately $125.8 million, $171.9 million and $154.7 million (Note 11) relating to consolidated real estate investments during the years ended December 31, 2011, 2010 and 2009, respectively.

Real Estate Held for Sale

The Company generally considers assets to be held for sale when management believes that a sale is probable within a year. This generally occurs when a sales contract is executed with no contingencies and the prospective buyer has significant funds at risk to ensure performance. Assets that are classified as held for sale are recorded at the lower of their carrying amount or fair value less cost to sell.

Disposition of Real Estate and Real Estate Investments

Sales of real estate include the sale of land, operating properties, investments in real estate joint ventures and partial sales to real estate joint ventures. Gains from dispositions are recognized using the full accrual or partial sale methods, provided that various criteria relating to the terms of sale and any subsequent involvement by the Company with the asset sold are met. If the criteria for sale recognition or gain recognition are not met because of a form of continuing involvement, the accounting for such transactions is dependent on the nature of the continuing involvement. In certain cases, a sale might not be recognized, and in others all or a portion of the gain might be deferred.

Pursuant to the definition of a component of an entity and, assuming no significant continuing involvement, the operations of the sold asset or asset classified as held for sale are considered discontinued operations. Interest expense, which is specifically identifiable to the property, is included in the computation of interest expense attributable to discontinued operations. Consolidated interest expense at the corporate level is allocated to discontinued operations based on the proportion of net assets disposed.

Interest and Real Estate Taxes

Interest and real estate taxes incurred relating to the construction, expansion or redevelopment of shopping centers are capitalized and depreciated over the estimated useful life of the building. This includes interest incurred on funds invested in or advanced to unconsolidated joint ventures with qualifying development activities. The Company will cease the capitalization of these expenses when construction activities are substantially completed and the property is available for occupancy by tenants. If the Company suspends substantially all activities related to development of a qualifying asset, the Company will cease capitalization of interest, insurance and taxes until activities are resumed.

Interest paid during the years ended December 31, 2011, 2010 and 2009 aggregated $218.6 million, $221.5 million and $249.3 million, respectively, of which $12.7 million, $12.2 million and $21.8 million, respectively, was capitalized.

F-11

Investments in and Advances to Joint Ventures

To the extent that the Company’s cost basis is different from the basis reflected at the unconsolidated joint venture level, the basis difference is amortized over the life of the related assets and included in the Company’s share of equity in net income (loss) of the joint venture. On a periodic basis, management assesses whether there are any indicators that the value of the Company’s investments in unconsolidated joint ventures may be impaired. An investment’s value is impaired only if management’s estimate of the fair value of the investment is less than the carrying value of the investment and such difference is deemed to be other than temporary. The Company recorded aggregate impairment charges of approximately $2.9 million, $0.2 million and $184.6 million (Note 11) related to its investments in unconsolidated joint ventures during the years ended December 31, 2011, 2010 and 2009, respectively. These impairment charges could create a basis difference between the Company’s share of accumulated equity as compared to the investment balance of the respective unconsolidated joint venture. The Company allocates the aggregate impairment charge to each of the respective properties owned by the joint venture on a relative fair value basis and, where appropriate, amortizes this basis differential as an adjustment to the equity in net income (loss) recorded by the Company over the estimated remaining useful lives of the underlying assets.

Cash and Cash Equivalents

The Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents. The Company maintains cash deposits with major financial institutions, which from time to time may exceed federally insured limits. The Company periodically assesses the financial condition of these institutions and believes that the risk of loss is minimal. Cash flows associated with items intended as hedges of identifiable transactions or events are classified in the same category as the cash flows from the items being hedged.

Restricted Cash

Restricted cash represents legally restricted amounts with financial institutions primarily for a bond sinking fund, debt services payments, real estate taxes, capital improvements and operating reserves as required pursuant to the respective loan agreement.

Accounts Receivable

The Company makes estimates of the amounts that will not be collected of its accounts receivable related to base rents, straight-line rents receivable, expense reimbursements and other revenues. The Company analyzes accounts receivable and historical bad debt levels, tenant credit worthiness and current economic trends when evaluating the adequacy of the allowance for doubtful accounts. In addition, tenants in bankruptcy are analyzed and estimates are made in connection with the expected recovery of pre-petition and post-petition claims.

Accounts receivable, other than straight-line rents receivable, are expected to be collected within one year and are net of estimated unrecoverable amounts of approximately $19.3 million and $22.6 million at December 31, 2011 and 2010, respectively. At December 31, 2011 and 2010, straight-line rents receivable, net of a provision for uncollectible amounts of $3.2 million and $3.4 million, respectively, aggregated $55.7 million and $56.2 million, respectively.

Notes Receivable

Notes receivable include certain loans that are held for investment and are generally collateralized by real estate-related investments and may be subordinate to other senior loans. Loan receivables are recorded at stated principal amounts or at initial investment plus accretable yield for loans purchased at a discount. The related discounts on mortgages and other loans purchased are accreted over the life of the related loan receivable. The Company defers loan origination and commitment fees, net of origination costs, and amortizes them over the term of the related loan. The Company considers notes receivable to be past-due or delinquent when a contractually required principal or interest payment is not remitted in accordance with the provisions of the underlying agreement.

F-12

The Company evaluates the collectability of both interest and principal on each loan based on an assessment of the underlying collateral to determine whether it is impaired, and not by the use of internal risk ratings. A loan is considered to be impaired when, based upon current information and events, it is probable that the Company will be unable to collect all amounts due according to the existing contractual terms, and the amount of loss can be reasonably estimated. When a loan is considered to be impaired, the amount of loss is calculated by comparing the recorded investment to the value of the underlying collateral. As the underlying collateral for a majority of the notes receivable is real-estate related investments, the same valuation techniques are used to value the collateral as those used to determine the fair value of real estate investments for impairment purposes. Given the small number of loans, the Company does not provide for an additional allowance for loan losses based on the grouping of loans, as the Company believes the characteristics of its loans are not sufficiently similar to allow an evaluation of these loans as a group for a possible loan loss allowance. As such, all of the Company’s loans are evaluated individually for this purpose. Interest income on performing loans is accrued as earned. A loan is placed on non-accrual status when, based upon current information and events, it is probable that the Company will not be able to collect all amounts due according to the existing contractual terms. Interest income on non-performing loans is generally recognized on a cash basis. Recognition of interest income on non-performing loans on an accrual basis is resumed when it is probable that the Company will be able to collect amounts due according to the contractual terms.

Deferred Charges

Costs incurred in obtaining indebtedness are included in deferred charges in the accompanying consolidated balance sheets and are amortized over the terms of the related debt agreements. Such amortization is reflected as interest expense in the consolidated statements of operations.

Deferred Tax Assets

The Company accounts for income taxes related to its taxable REIT subsidiary (“TRS”) under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements. Under this method, deferred tax assets and liabilities are determined based on the differences between the financial statement and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in the income statement in the period that includes the enactment date.

The Company records net deferred tax assets to the extent it believes it is more likely than not that these assets will be realized. In making such determination, the Company considers all available positive and negative evidence, including forecasts of future taxable income, the reversal of other existing temporary differences, available net operating loss carryforwards, tax planning strategies and recent results of operations. Several of these considerations require assumptions and significant judgment about the forecasts of future taxable income and are consistent with the plans and estimates that the Company is utilizing to manage its business. Based on this assessment, management must evaluate the need for, and amount of, valuation allowances against the Company’s deferred tax assets. To the extent facts and circumstances change in the future, adjustments to the valuation allowances may be required. In the event the Company were to determine that it would be able to realize the deferred income tax assets in the future in excess of their net recorded amount, the Company would adjust the valuation allowance, which would reduce the provision for income taxes. Accordingly, the Company would record a valuation allowance to reduce deferred tax assets when it has determined that an uncertainty exists regarding their realization, which would increase the provision for income taxes. The Company recorded a valuation allowance of $58.3 million (Note 16) during the year ended December 31, 2010.

Treasury Shares

The Company’s share repurchases are reflected as treasury shares utilizing the cost method of accounting and are presented as a reduction to consolidated shareholders’ equity. Reissuances of the Company’s treasury shares at an amount below cost are recorded as a charge to paid-in capital due to the Company’s cumulative distributions in excess of net loss.

F-13

Revenue Recognition

Minimum rents from tenants are recognized using the straight-line method over the lease term of the respective leases. Percentage and overage rents are recognized after a tenant’s reported sales have exceeded the applicable sales breakpoint set forth in the applicable lease. Revenues associated with expense reimbursements from tenants are recognized in the period that the related expenses are incurred based upon the tenant lease provision. Fee and other income includes management fees recorded in the period earned based on a percentage of collected rent at the properties under management. Fee income derived from the Company’s unconsolidated joint venture investments is recognized to the extent attributable to the unaffiliated ownership interest. Ancillary and other property-related income, primarily composed of leasing vacant space to temporary tenants and kiosk income, is recognized in the period earned. Lease termination fees are recognized upon the effective termination of a tenant’s lease when the Company has no further obligations under the lease.

Fee and other income from continuing operations was composed of the following (in thousands):

	For the Year Ended December 31,
	2011		2010		2009
Management, development, financing and other fee income	$	47,539	$	54,592	$	58,734
Ancillary and other property income		28,704		20,343		20,015
Lease termination fees		5,897		7,482		3,983
Other miscellaneous		609		2,123		2,161
Total fee and other income	$	82,749	$	84,540	$	84,893

General and Administrative Expenses

General and administrative expenses include internal leasing and legal salaries and related expenses associated with the re-leasing of existing space, which are charged to operations as incurred.

Stock Option and Other Equity-Based Plans

Compensation cost relating to stock-based payment transactions classified as equity is recognized in the financial statements based upon the grant date fair value. Forfeitures are estimated at the time of grant in order to estimate the amount of share-based awards that will ultimately vest. The forfeiture rate is based on historical rates for non-executive employees and actual expectations for executives.

For the years ended December 31, 2011, 2010 and 2009, stock-based compensation cost recognized by the Company was $6.8 million, $5.7 million and $17.4 million, respectively. This amount includes $1.6 million and $0.4 million as a result of accelerated vesting of awards due to employee severance charges in 2011 and 2010, respectively, and a $15.4 million charge as a result of a change in control, as defined in the equity award plan, in 2009. For the years ended December 31, 2011, 2010 and 2009, the Company capitalized $0.3 million, $0.2 million and $0.1 million of stock-based compensation, respectively, related to certain direct and incremental internal construction costs.

Income Taxes

The Company has made an election to qualify, and believes it is operating so as to qualify, as a REIT for federal income tax purposes. Accordingly, the Company generally will not be subject to federal income tax, provided that it makes distributions to its shareholders equal to at least the amount of its REIT taxable income as defined under Sections 856 through 860 of the Internal Revenue Code of 1986, as Amended (the “Code”) and continues to satisfy certain other requirements.

F-14

In connection with the REIT Modernization Act, which became effective January 1, 2001, the Company is permitted to participate in certain activities that it was previously precluded from in order to maintain its qualification as a REIT, so long as these activities are conducted in entities that elect to be treated as taxable subsidiaries under the Code. As such, the Company is subject to federal and state income taxes on the income from these activities.

Foreign Currency Translation

The financial statements of the Company’s international consolidated and unconsolidated joint venture investments are translated into U.S. dollars using the exchange rate at each balance sheet date for assets and liabilities, an average exchange rate for each period for revenues, expenses, gains and losses, and at the transaction date for impairments or sales, with the Company’s proportionate share of the resulting translation adjustments recorded as Accumulated Other Comprehensive Income (Loss). Gains or losses resulting from foreign currency transactions, translated to local currency, are included in income as incurred. Foreign currency gains or losses from changes in exchange rates were not material to the consolidated operating results.

Derivative and Hedging Activities

The Company records all derivatives on the balance sheet at fair value. The accounting for changes in the fair value of derivatives depends on the intended use of the derivative, whether the Company has elected to designate a derivative in a hedging relationship and apply hedge accounting, and whether the hedging relationship has satisfied the criteria necessary to apply hedge accounting. Derivatives designated and qualifying as a hedge of the exposure to changes in the fair value of an asset, liability or firm commitment attributable to a particular risk, such as interest rate risk, are considered fair value hedges. Derivatives designated and qualifying as a hedge of the exposure to variability in expected future cash flows, or other types of forecasted transactions, are considered cash flow hedges. Derivatives may also be designated as hedges of the foreign currency exposure of a net investment in a foreign operation. Hedge accounting generally provides for the matching of the timing of gain or loss recognition on the hedging instrument with the recognition of the changes in the fair value of the hedged asset or liability that are attributable to the hedged risk in a fair value hedge or the earnings effect of the hedged forecasted transactions in a cash flow hedge. The Company may enter into derivative contracts that are intended to economically hedge certain of its risk, even if hedge accounting does not apply or the Company elects not to apply hedge accounting.

New Accounting Standards Implemented

Presentation of Other Comprehensive Income

In June 2011, the Financial Accounting Standard Board (“FASB”) issued guidance on the presentation of comprehensive income. This guidance eliminates the option to present the components of other comprehensive income as part of the consolidated statements of equity, which was the Company’s previous presentation, and requires presentation of reclassification adjustments from other comprehensive income to net income on the face of the financial statements. This presentation was adopted by the Company at December 31, 2011. In December 2011, the FASB deferred only those changes in the guidance that relate to the presentation of reclassification adjustments out of accumulated other comprehensive income. These provisions are effective in fiscal years beginning after December 15, 2011. When adopted, the guidance is not expected to materially impact the Company’s consolidated financial statements.

New Accounting Standards to be Implemented

Fair Value Measurements

In May 2011, the FASB issued Accounting Standards Update No. 2011-04, “Fair Value Measurements and Disclosures (Topic 820) — Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRS” (“ASU 2011-04”). ASU 2011-04 clarifies the application of existing fair value measurement requirements, changes certain principles related to measuring fair value and requires additional disclosures about fair value measurements.

F-15

Specifically, the guidance specifies that the concepts of highest and best use and valuation premise in a fair value measurement are only relevant when measuring the fair value of nonfinancial assets whereas they are not relevant when measuring the fair value of financial assets and liabilities. Required disclosures are expanded under the new guidance, especially for fair value measurements that are categorized within Level 3 of the fair value hierarchy, for which quantitative information about the unobservable inputs used, and a narrative description of the valuation processes in place and sensitivity of recurring Level 3 measurements to changes in unobservable inputs will be required. Entities will also be required to disclose the categorization by level of the fair value hierarchy for items that are not measured at fair value in the balance sheet but for which the fair value is required to be disclosed. ASU 2011-04 is effective for annual periods beginning after December 15, 2011, and is to be applied prospectively. The Company does not expect the adoption of this guidance will have a material impact, if any, on its financial statements.

Derecognition of in Substance Real Estate

In November 2011, the FASB ratified the Emerging Issues Task Force (“EITF”) consensus, ASU 2011-10, “Derecognition of in Substance Real Estate — a Scope Clarification.” This guidance clarifies that ASC 360-20, “Property Plant and Equipment — Real Estate Sales” (“ASC 360-20”) is the authoritative guidance when an investor loses control of real estate to a lender as a result of defaulting on a loan. Therefore, the investor is precluded from derecognizing the real estate until legal ownership has been transferred to the lender. The accounting for this fact pattern was addressed by the EITF due to diversity in practice. Under the Company’s historical accounting policies, it believed that it no longer had the contractual ability to direct the activities that most significantly affected the economic performance of entities in the control of a lender. Therefore, the Company’s historical accounting policy for evaluating these transactions is based upon ASC 810. This EITF will be effective prospectively for the Company for the fiscal years beginning on or after June 15, 2012 (i.e., fiscal year 2013 for the Company). The Company will apply this consensus on a prospective basis on the effective date.

2.    Investments in and Advances to Joint Ventures

The Company’s equity method joint ventures at December 31, 2011, which are included in Investments in and Advances to Joint Ventures in the Company’s consolidated balance sheets, are as follows:

Unconsolidated Real Estate Ventures	Effective Ownership Percentage(A)	Assets Owned
DDRA Community Centers Five LP	50.0%	Three shopping centers in two states
Sonae Sierra Brasil BV Sarl	33.3	10 shopping centers, a management company and three development projects in Brazil
Retail Value Investment Program IIIB LP	25.75	A shopping center in Chicago, Illinois
DDR Domestic Retail Fund I	20.0	60 grocery-anchored retail centers in several states
DDR Markaz II LLC	20.0	13 neighborhood grocery-anchored retail centers in several states
DDR — SAU Retail Fund LLC	20.0	27 grocery-anchored retail centers in several states
DDRTC Core Retail Fund LLC	15.0	41 shopping centers in several states
Coventry II Joint Ventures	10.0 – 20.0	Five shopping centers in several states
DPG Realty Holdings LLC	10.0	Two neighborhood grocery-anchored retail centers in two states
Other Joint Venture Interests	14.5 – 79.45	15 shopping centers in several states and a management and development company

F-16

The Company has a zero basis in the following equity method joint ventures at December 31, 2011 and has no intent or obligation to fund any further capital:

Unconsolidated Real Estate Ventures	Effective Ownership Percentage(A)	Assets Owned
Coventry II Joint Ventures	0.0 – 20.0%	41 retail sites/centers in several states
DDR MDT PS LLC	0.0	Seven shopping centers in several states

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

Condensed combined financial information of the Company’s unconsolidated joint venture investments is summarized as follows (in thousands):

	December 31,
	2011			2010
Condensed combined balance sheets
Land	$	1,400,469		$	1,566,682
Buildings		4,334,097			4,783,841
Fixtures and tenant improvements		189,940			154,292
		5,924,506			6,504,815
Less: Accumulated depreciation		(808,352	)		(726,291	)
		5,116,154			5,778,524
Land held for development and construction in progress		239,036			174,237
Real estate, net		5,355,190			5,952,761
Cash and restricted cash(A)		308,008			122,439
Receivables, net		108,038			111,569
Leasehold interests		9,136			10,296
Other assets		168,115			181,387
	$	5,948,487		$	6,378,452
Mortgage debt	$	3,742,241		$	3,940,597
Notes and accrued interest payable to DDR		100,470			87,282
Other liabilities		214,370			186,333
		4,057,081			4,214,212
Accumulated equity		1,891,406			2,164,240
	$	5,948,487		$	6,378,452
Company’s share of accumulated equity	$	402,242		$	480,200

F-17

	For the Year Ended December 31,
	2011			2010			2009
Condensed combined statements of operations
Revenues from operations	$	695,553		$	647,689		$	757,358
Operating expenses		234,571			246,628			291,528
Impairment charges(B)		208,843			65			218,479
Depreciation and amortization		182,084			182,208			211,694
Interest expense		227,327			225,973			275,558
		852,825			654,874			997,259
Loss before other items		(157,272	)		(7,185	)		(239,901	)
Income tax expense (primarily Sonae Sierra Brasil), net		(38,850	)		(20,449	)		(10,013	)
Other income(C)		—			10,591			7,153
Loss from continuing operations		(196,122	)		(17,043	)		(242,761	)
Discontinued operations:
Loss from discontinued operations(D)		(62,380	)		(20,281	)		(205,595	)
Gain on debt forgiveness(E)		2,976			—			—
Gain (loss) on disposition of real estate, net of tax		18,705			(26,674	)		(19,448	)
Loss before gain (loss) on disposition of real estate, net		(236,821	)		(63,998	)		(467,804	)
Gain (loss) on disposition of real estate, net(F)		1,733			17			(25,973	)
Net loss	$	(235,088	)	$	(63,981	)	$	(493,777	)
Non-controlling interests		(16,132	)		(458	)		(1,178	)
Net loss attributable to unconsolidated joint ventures	$	(251,220	)	$	(64,439	)	$	(494,955	)
Company’s share of equity in net (loss) income of joint ventures(G)	$	(12,979	)	$	6,319		$	(34,522	)

(A) Includes cash of $222.2 million and $40.1 million at December 31, 2011 and 2010, from the Company’s proportionate share of its investment in Sonae Sierra Brasil. The increase in 2011 primarily related to proceeds generated from Sonae Sierra Brasil’s February 2011 initial public offering.

(B) For the year ended December 31, 2011, the Company’s proportionate share of the impairment charges was $6.6 million. For the years ended December 31, 2010 and 2009, the Company’s share of the impairment charges was zero as the Company had written off its basis in those investments. The Company’s share of the impairment charges was reduced by the impact of the other than temporary impairment charges recorded on these investments as discussed below.

(C) The 2010 activity related to debt forgiveness on one property owned by a joint venture with the Coventry II Fund (hereinafter defined) in which the Company has a zero basis. The 2009 activity related to the liquidation of the Company’s investment in the publicly traded units of a previous unconsolidated joint venture.

(D) For the years ended December 31, 2011, 2010 and 2009, impairment charges reclassified to discontinued operations related to asset sales, including the two properties sold in the six-month period ended June 30, 2012, were $63.6 million, $21.0 million and $204.8 million, respectively, of which the Company’s proportionate share was $6.3 million, $0.7 million and $8.1 million, respectively. The Company’s share of the impairment charges was reduced by the impact of the other than temporary impairment charges recorded on these investments as discussed below.

(E) Gain on debt forgiveness is related to one property owned by an unconsolidated joint venture that was transferred to the lender pursuant to a consensual foreclosure proceeding. The operations of the asset have been reclassified as discontinued operations in the condensed combined statements of operations.

F-18

(F) In 2009, a joint venture with the Coventry II Fund transferred its interest in the Kansas City, Missouri, project (Ward Parkway) to the lender and recorded a loss of $26.7 million. The Company recorded a $5.8 million loss in 2009 related to the write-off of the book value of its equity investment, which is included within equity in net loss of joint ventures in the consolidated statement of operations.

(G) The difference between the Company’s share of net income (loss), as reported above, and the amounts included in the consolidated statements of operations is attributable to the amortization of basis differentials, deferred gains and differences in gain (loss) on sale of certain assets due to the basis differentials and other than temporary impairment charges. The Company is not recording income or loss from those investments in which its investment basis is zero and the Company does not have the obligation or intent to fund any additional capital. Adjustments to the Company’s share of joint venture net income (loss) for these items are reflected as follows (in millions):

	For the Year Ended December 31,
	2011		2010			2009
Income (loss), net	$	26.7	$	(0.7	)	$	24.8

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

	For the Year  Ended December 31,
	2011			2010
Company’s share of accumulated equity	$	402.2		$	480.2
Basis differentials(A)		(145.6	)		(147.5	)
Deferred development fees, net of portion related to the Company’s interest		(3.6	)		(3.4	)
Notes receivable from investments		0.4			0.6
Notes and accrued interest payable to DDR(B)		100.5			87.3
Investments in and Advances to Joint Ventures	$	353.9		$	417.2

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

(B) The Company has made advances to several joint ventures that bear annual interest at rates ranging from 10.5% to 12.0%. Maturity dates are all payment on demand. During 2011, the Company recorded a $1.6 million reserve associated with a $4.3 million construction loan advanced to a 50%-owned joint venture. The impairment was driven by the deterioration in value of the real estate collateral supporting the note. The stated terms are payable on demand from available cash flow from the property after debt service on the first mortgage. The reserve is classified as an impairment of joint venture investments in the consolidated statement of operations for the year ended December 31, 2011.

F-19

The Company advanced financing of $66.9 million to one of the Coventry II Fund joint ventures, Coventry II DDR Bloomfield, related to a development project in Bloomfield Hills, Michigan (the “Bloomfield Loan”). This loan is in default and was fully reserved by the Company in 2008 as discussed below.

Included in the Company’s accounts receivables are approximately $1.8 million and $1.7 million at December 31, 2011 and 2010, respectively, due from affiliates primarily related to construction receivables.

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

	For the Year Ended December 31,
	2011		2010		2009
Management and other fees	$	29.8	$	34.0	$	47.0
Financing and other fees		0.1		0.3		1.0
Development fees and leasing commissions		7.0		7.2		9.2
Interest income		0.1		0.4		7.4

The Company’s joint venture agreements generally include provisions whereby each partner has the right to trigger a purchase or sale of its interest in the joint venture (Reciprocal Purchase Rights) or to initiate a purchase or sale of the properties (Property Purchase Rights) after a certain number of years or if either party is in default of the joint venture agreements. The Company is not obligated to purchase the interests of its outside joint venture partners under these provisions.

Sonae Sierra Brasil

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

Coventry II Fund

The Company and Coventry Real Estate Advisors L.L.C. (“CREA”) formed Coventry Real Estate Fund II L.L.C. and Coventry Fund II Parallel Fund, L.L.C. (collectively, the “Coventry II Fund”) to invest in a variety of retail properties that presented opportunities for value creation, such as re-tenanting, market repositioning, resale, redevelopment or expansion. The Coventry II Fund was formed with several institutional investors and CREA as the investment manager.

At December 31, 2011, the aggregate carrying amount of the Company’s net investment in the Coventry II Fund joint ventures was approximately $15.8 million. This basis reflects the impact of impairment charges of $66.7 million as discussed below, as well as a loan loss provision on the Bloomfield Loan of $66.9 million, which includes accrued interest of $8.8 million. This loan accrues interest at a base rate of the greater of LIBOR plus 700 basis points or 12%, has a default rate of 16% and had an initial maturity of July 2011. The Bloomfield Loan has been considered past due since March 2009 due to the default status. The impairment charges and the loan loss provision are reflected in the impairment of joint venture investments line item in the consolidated statement of operations.

See discussion of legal matters surrounding the Coventry II Fund (Note 9).

F-20

Other Joint Venture Interests

In 2011, the Company acquired its partners’ 50% ownership interests in two shopping centers (Note 3). Also in 2011, the Company sold its 10% interest in TRT DDR Venture I to its joint venture partner. In addition, the Company sold its 50% equity interest in a development project in Oconomowoc, Wisconsin, to its partner. The Company recognized a net gain on the change in control of interests and sale of its interests in these joint ventures of approximately $25.2 million in the year ended December 31, 2011.

Discontinued Operations

Included in discontinued operations in the combined statements of operations for the unconsolidated joint ventures are two properties sold in the six-month period ended June 30, 2012, eight properties sold or transferred in 2011, 37 properties sold or transferred in 2010 and 12 properties sold in 2009.

Other Than Temporary Impairment of Joint Venture Investments

Due to the then-deterioration of the U.S. capital markets that began in 2008, which continued in 2009, the lack of liquidity and the related impact on the real estate market and retail industry, the Company determined that several of its unconsolidated joint venture investments incurred an “other than temporary impairment.” The Company recorded impairment charges, which are separate and apart from the impairments recorded at the investee level, on the following unconsolidated joint venture investments as follows (in millions):

	For the Year Ended December 31,
	2011		2010		2009
DDR Markaz II LLC	$	1.3	$	—	$	—
Various Coventry II Fund joint ventures		—		0.2		52.4
DDRTC Core Retail Fund		—		—		55.0
DDR-SAU Retail Fund		—		—		6.2
DPG Realty Holdings		—		—		3.6
Central Park Solon/RO & SW Realty		—		—		0.5
		1.3		0.2		117.7
Loan loss reserve		1.6		—		66.9
Total impairments of joint venture investments	$	2.9	$	0.2	$	184.6

3.    Acquisitions

In December 2011, the Company acquired a shopping center in Columbus, Ohio, aggregating 0.7 million square feet of Company-owned gross leasable area (“GLA”) (all references to GLA or square feet are unaudited) for a total purchase price of approximately $80 million. The Company assumed $45.2 million of mortgage debt in connection with this acquisition.

In September 2011, the Company acquired three shopping centers, in two separate transactions, aggregating 0.5 million square feet of Company-owned GLA for an aggregate purchase price of approximately $110.0 million through the use of cash and assumed debt of $67.0 million.

In January and March 2011, in two separate transactions, the Company acquired its partners’ 50% ownership interests in two shopping centers for an aggregate purchase price of approximately $40 million. The Company acquired these assets pursuant to the terms of the respective underlying joint venture agreements. After closing, the Company repaid one mortgage note payable with a principal amount of $29.2 million in total and refinanced the other mortgage with a new $21.0 million, 11-year mortgage note payable.

F-21

As a result of the transactions, the Company owns 100% of the two shopping centers with an aggregate gross value of approximately $80.0 million. Due to the change in control that occurred, the Company recorded an aggregate gain of approximately $22.7 million associated with the acquisitions related to the difference between the Company’s carrying value and fair value of its previously held equity interest on the respective acquisition date.

The Company accounted for the acquisition of assets utilizing the purchase method of accounting. The acquisition of the six shopping centers was allocated as follows (in thousands):

Land	$	73,415
Buildings		183,068
Tenant improvements		3,678
Intangible assets		35,046
		295,207
Less: Mortgage debt assumed		(173,013	)
Less: Below-market leases(1)		(14,300	)
Net assets acquired	$	107,894

(1) Below-market leases will be amortized over a weighted-average life of 16.5 years.

The costs related to the acquisition of these assets were expensed as incurred and included in other income (expense), net.

Intangible assets recorded in connection with the above acquisitions included the following (in thousands) (Note 5):

			Weighted Average Amortization Period (in Years)
In-place leases (including lease origination costs and fair market value of leases)(1)	$	18,069		5.0
Tenant relations		16,977		9.6
Total intangible assets acquired	$	35,046

(1) Includes above-market value of leases of approximately $1.4 million.

F-22

The following unaudited supplemental pro forma operating data is presented for the years ended December 31, 2011 and 2010, as if the acquisition of the interests in the six properties were completed at the beginning of 2010 (in thousands, except per share amounts). The unaudited supplemental pro forma operating data is not necessarily indicative of what the actual results of operations of the Company would have been assuming the transactions had been completed as set forth above, nor do they purport to represent the Company’s results of operations for future periods.

	For the Years Ended December 31, (Unaudited)
	2011			2010
Pro forma revenues	$	769,323		$	770,691
Pro forma loss from continuing operations	$	(33,573	)	$	(144,698	)
Pro forma loss from discontinued operations	$	(18,961	)	$	(87,654	)
Pro forma net loss attributable to DDR common shareholders	$	(79,901	)	$	(234,940	)
Per share data:
Basic earnings per share data:
Loss from continuing operations attributable to DDR common shareholders	$	(0.23	)	$	(0.71	)
Loss from discontinued operations attributable to DDR common shareholders		(0.07	)		(0.25	)
Net loss attributable to DDR common shareholders	$	(0.30	)	$	(0.96	)
Diluted earnings per share data:
Loss from continuing operations attributable to DDR common shareholders	$	(0.31	)	$	(0.71	)
Loss from discontinued operations attributable to DDR common shareholders		(0.07	)		(0.25	)
Net loss attributable to DDR common shareholders	$	(0.38	)	$	(0.96	)

4.    Notes Receivable

The Company has notes receivable, including accrued interest, that are collateralized by certain rights in development projects, partnership interests, sponsor guaranties and/or real estate assets some of which are subordinate to other financings.

Notes receivable consist of the following (in millions):

	December 31,				Maturity Date	Interest Rate
	2011		2010
Loans receivable(A)	$	84.5	$	103.7	September 2011 to October 2017	5.7% - 14.0%
Other notes		3.0		2.8	November 2014 to September 2017	8.5% - 12.0%
Tax Increment Financing Bonds (“TIF Bonds”)(B)		6.4		13.8	April 2014 to July 2026	5.5% - 8.5%
	$	93.9	$	120.3

(A) Amounts exclude notes receivable and advances from unconsolidated joint ventures (Note 2).

F-23

(B) Principal and interest are payable solely from the incremental real estate taxes, if any, generated by the respective shopping center and development project pursuant to the terms of the financing agreement.

As of December 31, 2011 and 2010, the Company had six and eight loans receivable, respectively, with total remaining non-discretionary commitments of $6.0 million and $4.0 million, respectively. The following table summarizes the activity in loans receivable on real estate from January 1, 2010, to December 31, 2011 (in thousands):

	2011			2010
Balance at January 1	$	103,705		$	58,719
Additions:
New mortgage loans		10,000			60,618
Interest		811			3,106
Accretion of discount		780			250
Deductions:
Payments of principal		(25,755	)		—
Loan foreclosure(A)		—			(18,988	)
Loan loss reserve(B)		(5,000	)		—
Balance at December 31	$	84,541		$	103,705

(A) A loan receivable in the amount of approximately $19.0 million at December 31, 2009, that was considered non-performing was foreclosed in 2010. This transaction resulted in an increase in real estate assets and a decrease in notes receivable of approximately $19.0 million in 2010, as the carrying value of the loan receivable approximated the fair value of the real estate assets acquired through foreclosure.

(B) Amount classified in other expense, net in the consolidated statement of operations for the year ended December 31, 2011. This reserve was written off upon the sale of the note in 2011.

The following table summarizes the activity in the loan loss reserve from January 1, 2009, to December 31, 2011 (in thousands):

	2011			2010			2009
Balance at January 1	$	10,806	(A)	$	10,806	(A)	$	5,400	(A)
Additions:
Loan loss reserve		5,000	(B)		—			5,406
Deductions:
Write downs		(5,000	)(B)		—			—
Balance at December 31	$	10,806	(A)	$	10,806	(A)	$	10,806	(A)

(A) The Company maintains a loan receivable with a carrying value of $10.8 million that was fully reserved at December 31, 2010 and 2009, resulting in a specific loan loss reserve of approximately $10.8 million. The impairment was driven by the deterioration of the economy and the dislocation of the credit markets. Interest income is no longer being recorded on this loan. At December 31, 2011 and December 31, 2010, this note was more than 90 days past due on principal and interest payments. This is the only loan receivable in the Company’s portfolio that has a loan loss reserve and is considered impaired at December 31, 2011.

(B) In 2011, the Company sold a note receivable with a face value, including accrued interest, of $11.8 million for proceeds of $6.8 million, which resulted in the recognition of a $5.0 million reserve. At December 31, 2010, this note was more than 90 days past due on interest payments. A loan loss reserve had not been previously established based on the estimated value of the underlying real estate collateral.

F-24

In addition, at December 31, 2011, the Company had one loan aggregating $9.3 million that matured in September 2011 and was more than 90 days past due. The Company is no longer recording interest income on this note. A loan loss reserve has not been established based on the estimated value of the underlying real estate collateral.

5.    Other Assets

Other assets consist of the following (in thousands):

	December 31,
	2011		2010
Intangible assets:
In-place leases (including lease origination costs and fair market value of leases), net	$	24,798	$	14,228
Tenant relations, net		22,772		9,035
Total intangible assets		47,570		23,263
Other assets:
Prepaid expenses		10,375		11,566
Deposits		6,788		17,306
Other assets		2,893		3,473
Total other assets	$	67,626	$	55,608

The Company recorded amortization expense of approximately $8.2 million, $6.6 million and $7.1 million for the years ended December 31, 2011, 2010 and 2009, respectively. The estimated future amortization expense associated with the Company’s intangible assets is $11.0 million, $10.1 million, $7.4 million, $3.9 million and $3.3 million for the years ending December 31, 2012, 2013, 2014, 2015 and 2016, respectively.

6.    Revolving Credit Facilities, Term Loan, Mortgages Payable and Scheduled Principal Repayments

The following table discloses certain information regarding the Company’s revolving credit facilities, term loan and mortgages payable (in millions):

	Carrying Value at December 31,				Weighted- Average Interest Rate at December 31,						Maturity Date
	2011		2010		2011			2010
Unsecured indebtedness:
Unsecured Credit Facility	$	102.4	$	279.9		2.7	%		3.5	%		February 2016
PNC Facility		40.0		—		1.9	%		—			February 2016
Secured indebtedness:
Term Loan		500.0		600.0		3.0	%		2.2	%		September 2014
Mortgage and other secured indebtedness — Fixed Rate		1,230.4		1,226.0		5.4	%		5.6	%		July 2012 - February 2022
Mortgage and other secured indebtedness — Variable Rate		91.0		144.1		2.0	%		3.5	%		January 2012 - December 2037
Tax-exempt certificates — Fixed Rate		1.0		8.5		6.9	%		7.1	%		February 2016

F-25

Revolving Credit Facilities

The Company maintains an unsecured revolving credit facility with a syndicate of financial institutions, arranged by JP Morgan Securities, LLC and Wells Fargo Securities, LLC (the “Unsecured Credit Facility”). In June 2011, the Company amended the Unsecured Credit Facility and reduced the availability from $950 million to $750 million. The Unsecured Credit Facility maturity date was extended by two years from February 2014 to February 2016, and the interest rate changed from LIBOR plus 275 basis points to LIBOR plus 165 basis points. The Unsecured Credit Facility provides for borrowings of up to $750 million, if certain financial covenants are maintained, and an accordion feature for expansion of availability to $1.25 billion upon the Company’s request, provided that new or existing lenders agree to the existing terms of the facility and increase their commitment level. The Unsecured Credit Facility includes a competitive bid option on periodic interest rates for up to 50% of the facility. The Unsecured Credit Facility also provides for an annual facility fee, which was reduced in June 2011 from 50 basis points to 35 basis points, on the entire facility. The Unsecured Credit Facility also allows for foreign currency-denominated borrowings. At December 31, 2011, the Company had US$25.1 million of Euro-denominated borrowings and US$59.4 million of Canadian dollar-denominated borrowings outstanding.

The Company also maintains a $65 million unsecured revolving credit facility with PNC Bank, National Association (the “PNC Facility” and, together with the Unsecured Credit Facility, the “Revolving Credit Facilities”) that was amended in June 2011. The PNC Facility reflects terms consistent with those contained in the Unsecured Credit Facility.

The Company’s borrowings under the Revolving Credit Facilities bear interest at variable rates at the Company’s election, based on either (i) the prime rate plus a specified spread (0.65% at December 31, 2011), as defined in the respective facility, or (ii) LIBOR, plus a specified spread (1.65% at December 31, 2011). The specified spreads vary depending on the Company’s long-term senior unsecured debt rating from Moody’s Investors Service (“Moody’s”) and Standard and Poor’s (“S&P”). The Company is required to comply with certain covenants relating to total outstanding indebtedness, secured indebtedness, maintenance of unencumbered real estate assets, unencumbered debt yield and fixed charge coverage. The Company was in compliance with these covenants at December 31, 2011.

Term Loan

The Company maintains a collateralized term loan with a syndicate of financial institutions, for which KeyBank National Association serves as the administrative agent (the “Term Loan”). The Company amended the Term Loan in June 2011 and reduced the amount outstanding from $550 million to $500 million with an accordion feature for expansion up to $600 million upon the Company’s request, provided that new or existing lenders agree to the existing terms of the facility and increase their commitment level. The amended Term Loan matures in September 2014 with a one-year extension option. Borrowings under the Term Loan bear interest at variable rates based on LIBOR, as defined in the loan agreement, plus a specified spread based (1.7% at December 31, 2011) on the Company’s long-term senior unsecured debt rating. The collateral for the Term Loan is real estate assets, or investment interests in certain assets, that are already encumbered by first mortgage loans. The Company is required to comply with covenants similar to those contained in the Revolving Credit Facilities. The Company was in compliance with these covenants at December 31, 2011.

Mortgages Payable and Other Secured Indebtedness

At December 31, 2011, mortgages payable, collateralized by investments and real estate with a net book value of approximately $2.3 billion, and related tenant leases are generally due in monthly installments of principal and/or interest. Fixed interest rates on mortgage payables range from approximately 4.2% to 9.8%.

F-26

Scheduled Principal Repayments

As of December 31, 2011, the scheduled principal payments of the Revolving Credit Facilities, Term Loan, senior notes (Note 7) and mortgages payable, excluding extension options, for the next five years and thereafter are as follows (in thousands):

Year	Amount
2012	$	545,938
2013		389,549
2014		819,347
2015		498,282
2016		507,823
Thereafter		1,330,301
	$	4,091,240
Fair market value of assumed debt		13,344
Total indebtedness	$	4,104,584

Total gross fees paid by the Company for the Revolving Credit Facilities and Term Loan in 2011, 2010 and 2009 aggregated approximately $4.0 million, $2.9 million and $2.3 million, respectively. For the years ended December 31, 2011, 2010 and 2009, the Company incurred debt extinguishment costs associated with the prepayment of mortgages payable of $7.9 million, $4.2 million and $14.4 million, respectively, which are reflected in other expense in the Company’s consolidated statements of operations.

7.    Senior Notes

The following table discloses certain information regarding the Company’s Fixed-Rate Senior Notes (in millions):

	Carrying Value at December 31,						Coupon Rate at December 31, 2011	Effective  Interest Rate at December 31, 2011	Maturity Date
	2011			2010
Unsecured indebtedness:
Senior Notes	$	1,658.6		$	1,468.4		4.75% - 9.625%	5.0% - 9.9%	October 2012 - September 2020
Senior Notes — Discount		(5.4	)		(4.4	)
Senior Convertible Notes due 2011, net		—			87.5		N/A	N/A	N/A
Senior Convertible Notes due 2012, net		178.9			194.1		3.00%	5.2%	March 2012
Senior Convertible Notes due 2040, net(A)		307.6			298.0		1.75%	5.3%	November 2040
Total Senior Notes	$	2,139.7		$	2,043.6

(A) The Company may redeem the notes any time on or after November 15, 2015, in whole or in part for cash equal to 100% of the principal amount of the notes plus accrued and unpaid interest through, but excluding, the redemption date.

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

F-27

The Senior Convertible Notes are senior unsecured obligations and rank equally with all other senior unsecured indebtedness of the Company. The following table summarizes the information related to the Senior Convertible Notes outstanding at December 31, 2011:

	Conversion Price		Option Price		Maximum Common Shares (millions)		Option Cost (millions)
Senior Convertible Notes due 2012(A)	$	74.56	$	82.71		1.1	$	32.6
Senior Convertible Notes due 2040(B)	$	16.19		N/A		N/A		N/A

(A) Conversion price as of December 31, 2011 and 2010.

(B) Conversion price as of December 31, 2011.

Concurrent with the issuance of the Senior Convertible Notes due 2012 issued in 2007, the Company purchased an option on its common shares in a private transaction in order to effectively increase the conversion price of the senior convertible notes to a specified option price (“Option Price”). This purchase option allows the Company to receive a number of the Company’s common shares (“Maximum Common Shares”) from counterparties equal to the number of common shares and/or cash related to the excess conversion value that it would pay to the holders of the senior convertible notes upon conversion. The options were recorded as a reduction of equity at issuance. No option was purchased related to the Senior Convertible Notes due 2040.

The Senior Convertible Notes may be converted prior to maturity into cash equal to the lesser of the principal amount of the note or the conversion value and, to the extent the conversion value exceeds the principal amount of the note, the Company’s common shares. The Senior Convertible Notes are subject to net settlement based on conversion prices (“Conversion Price”) that are subject to adjustment based on increases in the Company’s quarterly stock dividend. If certain conditions are met, the incremental value can be settled in cash or in the Company’s common shares at the Company’s option. The Senior Convertible Notes may only be converted prior to maturity based on certain provisions in the governing note documents. In connection with the issuance of these notes, the Company entered into a registration rights agreement for the common shares that may be issuable upon conversion of the Senior Convertible Notes.

The Company’s carrying amounts of its debt and equity balances for the Senior Convertible Notes are as follows (in thousands):

	December 31,
	2011			2010
Carrying value of equity component	$	69,217		$	79,287
Principal amount of Senior Convertible Notes	$	529,509		$	637,626
Remaining unamortized debt discount		(43,004	)		(58,032	)
Net carrying value of Senior Convertible Notes	$	486,505		$	579,594

As of December 31, 2011, the remaining amortization periods for the debt discount were approximately 3 months and 46 months for the Senior Convertible Notes due 2012 and the Senior Convertible Notes due 2040, respectively, the period during which the debt is expected to be outstanding (i.e., through the first optional redemption date or maturity date).

During the years ended December 31, 2011, 2010 and 2009, the Company purchased approximately $36.1 million, $259.1 million and $816.2 million, respectively, aggregate principal amount of its outstanding senior unsecured notes (of which $19.4 million, $140.6 million and $404.8 million, respectively, related to the Senior Convertible Notes due 2011 and 2012) at a discount to par resulting in a net loss of approximately $0.1 million in 2011 and a net gain of approximately $0.1 million and $145.1 million in 2010 and 2009, respectively.

F-28

The Company allocated the consideration paid for the Senior Convertible Notes due 2011 and 2012 between the liability components and equity components based on the fair value of those components immediately prior to the purchases and recorded a gain based on the difference in the amount of consideration paid as compared to the carrying amount of the debt, net of the unamortized discount. The amount recorded for the years ended December 31, 2011, 2010, and 2009, reflects a decrease of approximately $0.1 million, $4.9 million and $20.9 million, respectively, related to the impact of the convertible debt accretion.

The Company’s various fixed-rate senior notes have interest coupon rates averaging 5.9% at December 31, 2011 and 2010. Notes with an aggregate principal amount of $82.2 million may not be redeemed by the Company prior to maturity and will not be subject to any sinking fund requirements. Notes with an aggregate principal amount of $2.0 billion at December 31, 2011 may be redeemed based upon a yield maintenance calculation. Notes with an aggregate principal amount of $223.5 million are redeemable prior to maturity at par value plus a make-whole premium. However, if these notes are redeemed within 90 days of the maturity date, no make-whole premium is required.

The fixed-rate senior notes and Senior Convertible Notes were issued pursuant to indentures that contain certain covenants, including limitation on incurrence of debt, maintenance of unencumbered real estate assets and debt service coverage. Interest is paid semi-annually in arrears. At December 31, 2011 and 2010, the Company was in compliance with all of the financial and other covenants.

8.    Financial Instruments

The following methods and assumptions were used by the Company in estimating fair value disclosures of financial instruments:

Fair Value Hierarchy

The standard Fair Value Measurements specifies a hierarchy of valuation techniques based upon whether the inputs to those valuation techniques reflect assumptions other market participants would use based upon market data obtained from independent sources (observable inputs). The following summarizes the fair value hierarchy:

• Level 1	Quoted prices in active markets that are unadjusted and accessible at the measurement date for identical, unrestricted assets or liabilities;
• Level 2	Quoted prices for identical assets and liabilities in markets that are inactive, quoted prices for similar assets and liabilities in active markets or financial instruments for which significant inputs are observable, either directly or indirectly, such as interest rates and yield curves that are observable at commonly quoted intervals; and
• Level 3	Prices or valuations that require inputs that are both significant to the fair value measurement and unobservable.

In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, the level in the fair value hierarchy within which the fair value measurement in its entirety falls has been determined based on the lowest level input that is significant to the fair value measurement in its entirety. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the asset or liability.

Cash Flow and Fair Value Hedges

In June 2011, the Company entered into an interest rate swap with a notional amount of $100.0 million. This swap was executed to hedge a portion of interest rate risk associated with variable-rate borrowings. The swap converts LIBOR into a fixed rate on a portion of the Term Loan.

F-29

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

In March 2011, the Company terminated an interest rate swap with a notional amount of $50.0 million. The swap converted LIBOR into a fixed rate on the Company’s Revolving Credit Facilities. The fair value of the interest rate swap as of the termination date was not material.

In February 2011, the Company entered into treasury locks with an aggregate notional amount of $200.0 million. The treasury locks were terminated in connection with the issuance of the $300.0 million aggregate principal amount of senior notes in March 2011, resulting in a payment of approximately $2.2 million to the counterparty. The treasury locks were executed to hedge the benchmark interest rate associated with forecasted interest payments associated with the then-anticipated issuance of fixed-rate borrowings.

The effective portion of these hedging relationships has been deferred in accumulated other comprehensive income and will be reclassified into earnings over the term of the debt as an adjustment to earnings.

Measurement of Fair Value

At December 31, 2011 and 2010, the Company used pay-fixed interest rate swaps to manage its exposure to changes in benchmark interest rates (the “Swaps”). The valuation of these instruments is determined using widely accepted valuation techniques including discounted cash flow analysis on the expected cash flows of each derivative. The Company determined that the significant inputs used to value its derivatives fell within Level 2 of the fair value hierarchy.

Items Measured at Fair Value on a Recurring Basis

The following table presents information about the Company’s financial assets and liabilities, which consist of interest rate swap agreements (included in Other Liabilities) and marketable securities (included in Other Assets) from investments in the Company’s Elective Deferred Compensation Plan (Note 14) at December 31, 2011 and 2010, measured at fair value on a recurring basis as of December 31, 2011 and 2010, and indicates the fair value hierarchy of the valuation techniques used by the Company to determine such fair value (in millions):

	Fair Value Measurements
Assets (Liabilities):	Level 1		Level 2			Level 3		Total
December 31, 2011
Derivative Financial Instruments	$	—	$	(8.8	)	$	—	$	(8.8	)
Marketable Securities	$	2.7	$	—		$	—	$	2.7
December 31, 2010
Derivative Financial Instruments	$	—	$	(5.2	)	$	—	$	(5.2	)
Marketable Securities	$	2.8	$	—		$	—	$	2.8

As discussed above, the Company transferred its interest rate swaps into Level 2 from Level 3 during 2010 due to changes in the significance of the impact on the Company’s derivative’s valuation as a result of changes in nonperformance risk associated with the Company’s credit standing. In 2008, the Company determined that its derivative valuations in their entirety were classified in Level 3 of the fair value hierarchy. The credit spreads on the Company and certain of its counterparties widened significantly and, as a result, the Company assessed the significance of the impact of the credit valuation adjustments on the overall valuation of its derivative positions and determined that the credit valuation adjustments were significant to the overall valuation of all of its derivatives. The credit valuation adjustments associated with the Company’s counterparties and its own credit risk used Level 3 inputs, such as estimates of current credit spreads, to evaluate the likelihood of default by itself and its counterparties. These inputs reflect the Company’s assumptions.

F-30

At December 31, 2011, the Company did not have any Level 3 fair value measurements. The table presented below presents a reconciliation of the beginning and ending balances of interest rate swap agreements that are included in other liabilities having fair value measurements based on significant unobservable inputs (Level 3) (in millions):

	Derivative Financial Instruments- Liability
Balance of Level 3 at December 31, 2008	$	(21.7	)
Total losses included in other comprehensive (loss) income		6.3
Balance of Level 3 at December 31, 2009	$	(15.4	)
Total losses included in other comprehensive (loss) income		7.6
Transfers into Level 2		7.8
Balance of Level 3 at December 31, 2010	$	—

The unrealized loss of $3.7 million included in other comprehensive (loss) income (“OCI”) is in addition to the $2.2 million payment made to the counterparty related to the treasury locks that were executed and settled during the year ended December 31, 2011. The unrealized loss of $3.7 million included in OCI is attributable to the net change in unrealized gains or losses related to derivative liabilities that remained outstanding at December 31, 2011, none of which were reported in the Company’s consolidated statements of operations because they are designated and qualify as hedging instruments.

The Company calculates the fair value of its interest rate swaps based upon the amount of the expected future cash flows paid and received on each leg of the swap. The cash flows on the fixed leg of the swap are agreed to at inception, and the cash flows on the floating leg of the swap change over time as interest rates change. To estimate the floating cash flows at each valuation date, the Company utilizes a forward curve that is constructed using LIBOR fixings, Eurodollar futures and swap rates, which are observable in the market. Both the fixed and floating legs cash flows are discounted at market discount factors. For purposes of adjusting its derivative values, the Company incorporates the non-performance risk for both the Company and its counterparties to these contracts based upon either credit default swap spreads (if available) or Moody’s KMV ratings in order to derive a curve that considers the term structure of credit.

Other Fair Value Instruments

Investments in unconsolidated joint ventures are considered financial assets. See discussion of equity derivative instruments in Note 10 and a discussion of fair value considerations in Note 11.

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

The carrying amounts reported in the consolidated balance sheets for these financial instruments, excluding the liability associated with the equity derivative instruments (outstanding at December 31, 2010), approximated fair value because of their short-term maturities.

Notes Receivable and Advances to Affiliates

The fair value is estimated by discounting the current rates at which management believes similar loans would be made. The fair value of these notes was approximately $90.6 million and $120.8 million at December 31, 2011 and 2010, respectively, as compared to the carrying amounts of $91.0 million and $122.6 million, respectively. The carrying value of the TIF bonds, which was $6.4 million and $13.8 million at December 31, 2011 and 2010, respectively, approximated its fair value as of both periods. The fair value of loans to affiliates has been estimated by management based upon its assessment of the interest rate, credit risk and performance risk.

F-31

Debt

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

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

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

	December 31, 2011				December 31, 2010
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Senior notes	$	2,139,718	$	2,282,818	$	2,043,582	$	2,237,320
Revolving Credit Facilities and Term Loan		642,421		641,854		879,865		875,851
Mortgage payable and other indebtedness		1,322,445		1,352,142		1,378,553		1,394,393
	$	4,104,584	$	4,276,814	$	4,302,000	$	4,507,564

Risk Management Objective of Using Derivatives

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

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

Cash Flow Hedges of Interest Rate Risk

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

F-32

As of December 31, 2011 and 2010, the aggregate fair value of the Company’s $284.1 million and $150.0 million notional amount of Swaps was a liability of $8.8 million and $5.2 million, respectively, which is included in other liabilities in the consolidated balance sheets. The following table discloses certain information regarding the Swaps:

Aggregate Notional Amount (in millions)	LIBOR Fixed Rate			Maturity Date
$100.0		4.8	%	February 2012
$100.0		1.0	%	June 2014
$84.1		2.8	%	September 2017

All components of the Swaps were included in the assessment of hedge effectiveness. The Company expects that within the next 12 months it will reflect an increase to interest expense (and a corresponding decrease to earnings) of approximately $3.1 million.

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

Amounts reported in accumulated other comprehensive (loss) income related to derivatives will be reclassified to interest expense as interest payments are made on the Company’s variable-rate debt. As of December 31, 2011, the Company had the following outstanding interest rate swap derivatives that were designated as cash flow hedges of interest rate risk:

Interest Rate Derivative	Number of Instruments	Aggregate Notional Amount (in  millions)
Interest rate swaps	Three	$	284.1

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

	Liability Derivatives
Derivatives Designated as Hedging Instruments	December 31, 2011			December 31, 2010
	Balance Sheet Location	Fair Value		Balance Sheet Location	Fair Value
Interest rate products	Other liabilities	$	8.8	Other liabilities	$	5.2

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

	Amount of Gain (Loss) Recognized in OCI on Derivatives (Effective Portion)							Location of Gain (Loss) Reclassified from Accumulated OCI into Income (Effective Portion)	Amount of Gain (Loss) Reclassified from Accumulated OCI into Income (Effective Portion)
Derivatives in Cash Flow Hedging	Year Ended December 31,								Year Ended December 31,
	2011			2010		2009			2011			2010		2009
Interest rate products	$	(3.6	)	$	10.2	$	6.3	Interest expense	$	(0.1	)	$	0.4	$	0.4

F-33

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

Credit Risk-Related Contingent Features

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

Net Investment Hedges

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

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

	Amount of Gain (Loss) Recognized in OCI on Derivatives (Effective Portion)
	Year Ended December 31,
Derivatives in Net Investment Hedging Relationships	2011			2010			2009
Euro — denominated revolving credit facilities designated as a hedge of the Company’s net investment in its subsidiary	$	(0.2	)	$	8.6		$	(2.2	)
Canadian dollar — denominated revolving credit facilities designated as a hedge of the Company’s net investment in its subsidiaries		(0.4	)		(5.6	)		(16.3	)

9.    Commitments and Contingencies

Accrued Expense

The Company recorded a charge of $11.0 million in 2011 as a result of the termination without cause of its former Executive Chairman of the Board, the terms of which were pursuant to his amended and restated employment agreement dated July 2009. This charge included stock-based compensation expense of approximately $1.5 million related to the acceleration of expense associated with the grant date fair value of the unvested stock-based awards partially offset by the forfeiture of previously expensed awards that will no longer be issued. At December 31, 2011, approximately $8.3 million was included in accounts payable and accrued expenses in the Company’s consolidated balance sheet related to this obligation.

F-34

Legal Matters

The Company is a party to various joint ventures with the Coventry II Fund, through which 11 existing or proposed retail properties, along with a portfolio of former Service Merchandise locations, were acquired at various times from 2003 through 2006. The properties were acquired by the joint ventures as value-add investments, with major renovation and/or ground-up development contemplated for many of the properties. The Company was generally responsible for day-to-day management of certain of the properties through December 31, 2011. On November 4, 2009, Coventry Real Estate Advisors L.L.C., Coventry Real Estate Fund II, L.L.C. and Coventry Fund II Parallel Fund, L.L.C. (collectively, “Coventry”) filed suit against the Company and certain of its affiliates and officers in the Supreme Court of the State of New York, County of New York. The complaint alleges that the Company: (i) breached contractual obligations under a co-investment agreement and various joint venture limited liability company agreements, project development agreements and management and leasing agreements; (ii) breached its fiduciary duties as a member of various limited liability companies; (iii) fraudulently induced the plaintiffs to enter into certain agreements; and (iv) made certain material misrepresentations. The complaint also requests that a general release made by Coventry in favor of the Company in connection with one of the joint venture properties be voided on the grounds of economic duress. The complaint seeks compensatory and consequential damages in an amount not less than $500 million, as well as punitive damages. In response, the Company filed a motion to dismiss the complaint or, in the alternative, to sever the plaintiffs’ claims. In June 2010, the court granted the motion in part, dismissing Coventry’s claim that the Company breached a fiduciary duty owed to Coventry (and denying the motion as to the other claims). Coventry filed a notice of appeal regarding that portion of the motion granted by the court. The appeals court affirmed the trial court’s ruling regarding the dismissal of Coventry’s claim for breach of fiduciary duty. The Company filed an answer to the complaint, and has asserted various counterclaims against Coventry. On October 10, 2011, the Company filed a motion for summary judgment, seeking dismissal of all of Coventry’s remaining claims. The motion is currently pending before the court.

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

On November 18, 2009, the Company filed a complaint against Coventry in the Court of Common Pleas, Cuyahoga County, Ohio, seeking, among other things, a temporary restraining order enjoining Coventry from terminating “for cause” the management agreements between the Company and the various joint ventures because the Company believes that the requisite conduct in a “for-cause” termination (i.e., fraud or willful misconduct committed by an executive of the Company at the level of at least senior vice president) did not occur. The court heard testimony in support of the Company’s motion (and Coventry’s opposition) and on December 4, 2009, issued a ruling in the Company’s favor. Specifically, the court issued a temporary restraining order enjoining Coventry from terminating the Company as property manager “for cause.” The court found that the Company was likely to succeed on the merits, that immediate and irreparable injury, loss or damage would result to the Company in the absence of such restraint, and that the balance of equities favored injunctive relief in the Company’s favor. The Company filed a motion for summary judgment seeking a ruling by the Court that there was no basis for Coventry’s “for cause” termination as a matter of law. On August 2, 2011, the court entered an order granting the Company’s motion for summary judgment in all respects, finding that as a matter of law and fact, Coventry did not have the right to terminate the management agreements for cause. Coventry filed a notice of appeal of the court’s ruling.

The Company was also a party to litigation filed in November 2006 by a tenant in a Company property located in Long Beach, California. The tenant filed suit against the Company and certain affiliates, claiming the Company and its affiliates failed to provide adequate valet parking at the property pursuant to the terms of the lease with the tenant. After a six-week trial, the jury returned a verdict in October 2008, finding the Company liable for compensatory damages in the amount of approximately $7.8 million. In addition, the trial court awarded the tenant attorney’s fees and expenses in the amount of approximately $1.5 million.

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The Company filed motions for a new trial and for judgment notwithstanding the verdict, both of which were denied. The Company strongly disagreed with the verdict, as well as the denial of the post-trial motions. As a result, the Company appealed the verdict. In July 2010, the California Court of Appeals entered an order affirming the jury verdict. The Company had a $6.0 million liability accrued for this matter as of December 31, 2009. An additional charge of approximately $2.7 million, net of $2.4 million in taxes, was recorded in the second quarter of 2010. In November 2010, the Company made payment in full and final satisfaction of the judgment.

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

Commitments and Guaranties

In conjunction with the development and expansion of various shopping centers, the Company has entered into agreements with general contractors for the construction of shopping centers aggregating approximately $24.6 million as of December 31, 2011.

At December 31, 2011, the Company had outstanding letters of credit of approximately $26.5 million. The Company has not recorded any obligation associated with these letters of credit. The majority of the letters of credit are collateral for existing indebtedness and other obligations of the Company.

In conjunction with certain unconsolidated joint venture agreements, the Company and/or its equity affiliates agreed to fund the required capital associated with approved development projects, composed principally of outstanding construction contracts aggregating approximately $2.0 million as of December 31, 2011. The Company is entitled to receive a priority return on these capital advances at rates of approximately 8.5%.

In connection with certain of the Company’s unconsolidated joint ventures, the Company agreed to fund amounts due to the joint venture’s lender if such amounts are not paid by the joint venture based on the Company’s pro rata share of such amount, aggregating $41.4 million at December 31, 2011.

In connection with Service Holdings LLC, the Company guaranteed the annual base rental income for various affiliates of Service Holdings in the aggregate amount of $2.2 million. The Company has not recorded a liability for the guaranty, as the subtenants of Service Holdings are paying rent as due. The Company has recourse against the other parties in the partnership in the event of default. No assets of the Company are currently held as collateral to pay this guaranty.

Related to one of the Company’s developments in Long Beach, California, an affiliate of the Company has agreed to make an annual payment of approximately $0.6 million to defray a portion of the operating expenses of a parking garage through the earlier of October 2032 or the date when the city’s parking garage bonds are repaid. No assets of the Company are currently held as collateral related to these obligations. The Company has not recorded a liability for the guaranty.

The Company has guaranteed certain special assessment and revenue bonds issued by the Midtown Miami Community Development District. The bond proceeds were used to finance certain infrastructure and parking facility improvements. In the event of a debt service shortfall, the Company is responsible for satisfying the shortfall. There are no assets held as collateral or liabilities recorded related to these guaranties. To date, tax revenues have exceeded the debt service payments for these bonds.

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Leases

The Company is engaged in the operation of shopping centers that are either owned or, with respect to certain shopping centers, operated under long-term ground leases that expire at various dates through 2070, with renewal options. Space in the shopping centers is leased to tenants pursuant to agreements that provide for terms ranging generally from one month to 30 years and, in some cases, for annual rentals subject to upward adjustments based on operating expense levels, sales volume or contractual increases as defined in the lease agreements.

The scheduled future minimum rental revenues from rental properties under the terms of all non-cancelable tenant leases, assuming no new or renegotiated leases or option extensions for such premises for the subsequent five years ending December 31, are as follows for continuing operations (in thousands):

2012	$	496,358
2013		447,840
2014		388,805
2015		326,202
2016		263,152
Thereafter		968,609
	$	2,890,966

Scheduled minimum rental payments under the terms of all non-cancelable operating leases in which the Company is the lessee, principally for office space and ground leases, for the subsequent five years ending December 31, are as follows for continuing operations (in thousands):

2012	$	3,595
2013		3,608
2014		3,180
2015		3,686
2016		3,603
Thereafter		121,598
	$	139,270

10.    Non-Controlling Interests, Preferred Shares, Common Shares and Common Shares in Treasury

Non-Controlling Interests

Non-controlling interests consist of the following (in millions):

	December 31,
	2011		2010
Consolidated joint venture interests primarily outside the United States	$	21.6	$	27.3
Shopping centers and development parcels in various states		3.2		3.4
Operating partnership units		7.4		7.4
	$	32.2	$	38.1

At December 31, 2011 and 2010, the Company had 369,176 operating partnership units (“OP Units”) outstanding. These OP Units, issued to different partnerships, are exchangeable, at the election of the OP Unit holder, and under certain circumstances at the option of the Company, into an equivalent number of the Company’s common shares or for the equivalent amount of cash. Most of these OP Units have registration rights agreements equivalent to the number of OP Units held by the holder if the Company elects to settle in its common shares. The OP Units are classified on the Company’s balance sheet as non-controlling interests.

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The OP Unit holders are entitled to receive distributions, per OP Unit, generally equal to the per share distributions on the Company’s common shares. At December 31, 2011 and 2010, the Company had 29,525 redeemable OP Units outstanding. Redeemable OP Units are presented at the greater of their carrying amount (for all periods presented) or redemption value at the end of each reporting period. Changes in the value from period to period are recorded to paid-in capital in the Company’s consolidated balance sheets.

Preferred Shares

The Company’s preferred shares outstanding at December 31 are as follows (in thousands):

	December 31,
	2011		2010
Class G — 8.0% cumulative redeemable preferred shares, without par value, $250 liquidation value; 750,000 shares authorized; 720,000 shares issued and outstanding at December 31, 2010	$	—	$	180,000
Class H — 7.375% cumulative redeemable preferred shares, without par value, $500 liquidation value; 750,000 shares authorized; 410,000 shares issued and outstanding at December 31, 2011 and 2010		205,000		205,000
Class I — 7.5% cumulative redeemable preferred shares, without par value, $500 liquidation value; 750,000 shares authorized; 340,000 shares issued and outstanding at December 31, 2011 and 2010		170,000		170,000
	$	375,000	$	555,000

In April 2011, the Company redeemed all of its outstanding shares of 8.0% Class G cumulative redeemable preferred shares at a redemption price of $25.105556 per Class G depositary share (the sum of $25.00 per share and dividends per share of $0.105556 prorated to the redemption date) for an aggregate redemption price of $180.8 million. The Company recorded a charge of approximately $6.4 million to net loss available to common shareholders related to the write-off of the Class G preferred shares’ original issuance costs.

The Class H and Class I depositary shares represent 1/20 of a Class H and Class I preferred share and have a stated value of $500 per share. The Class H and Class I depositary shares are redeemable by the Company, except in certain circumstances relating to the preservation of the Company’s status as a REIT.

The Company’s authorized preferred shares consist of the following:

• 750,000 Class A Cumulative Redeemable Preferred Shares, without par value*

• 750,000 Class B Cumulative Redeemable Preferred Shares, without par value*

• 750,000 Class C Cumulative Redeemable Preferred Shares, without par value*

• 750,000 Class D Cumulative Redeemable Preferred Shares, without par value*

• 750,000 Class E Cumulative Redeemable Preferred Shares, without par value*

• 750,000 Class F Cumulative Redeemable Preferred Shares, without par value*

• 750,000 Class G Cumulative Redeemable Preferred Shares, without par value**

• 750,000 Class H Cumulative Redeemable Preferred Shares, without par value

• 750,000 Class I Cumulative Redeemable Preferred Shares, without par value

• 750,000 Class J Cumulative Redeemable Preferred Shares, without par value*

• 750,000 Class K Cumulative Redeemable Preferred Shares, without par value*

• 750,000 Non-Cumulative Preferred Shares, without par value*

• 2,000,000 Cumulative Voting Preferred Shares, without par value*

* None outstanding at December 31, 2011 or 2010.

** None outstanding at December 31, 2011.

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Common Shares

The Company’s common shares have a $0.10 per share par value. Dividends declared per share of common stock were $0.22, $0.08 and $0.44 for 2011, 2010 and 2009, respectively, which were paid in cash.

The Company declared a dividend payable for the first and second quarters of 2009 on its common shares of $0.20 per share that was paid in a combination of cash and the Company’s common shares. The aggregate amount of cash paid to shareholders was limited to 10% of the total dividend paid. In connection with the dividends in the first and second quarters of 2009, the Company issued approximately 8.3 million and 6.1 million common shares, respectively, based on the volume weighted-average trading price of $2.80 and $4.49 per share, respectively, and paid $2.6 million and $3.1 million, respectively, in cash. The Company declared an all-cash dividend of $0.02 per common share in each of the third and fourth quarters of 2009.

The Company issued common shares through open market sales, including through the use of its continuous equity programs, for the years ended December 31, 2011, 2010 and 2009, as follows (amounts in millions, except per share):

	Number of Shares Sold		Average Price Per Share		Net Proceeds
2011		9.5	$	13.71	$	129.7
2010		53.0	$	8.33	$	441.3
2009		23.5	$	8.78	$	204.5

The Otto Transaction

On February 23, 2009, the Company entered into a stock purchase agreement (the “Stock Purchase Agreement”) with Mr. Alexander Otto (the “Investor”) to issue and sell 30.0 million common shares for aggregate gross proceeds of approximately $112.5 million to the Investor and certain members of the Otto family (collectively with the Investor, the “Otto Family”). Under the terms of the Stock Purchase Agreement, the Company also issued additional common shares to the Otto Family in an amount equal to any dividend payable in shares declared by the Company after February 23, 2009, and prior to the applicable closing. The Stock Purchase Agreement also provided for the issuance of warrants to purchase up to 10.0 million common shares with an exercise price of $6.00 per share to the Otto Family. No separate consideration was paid for the warrants. The share issuances, together with the warrant issuances, are collectively referred to as the “Otto Transaction.” In March 2011, the Otto Family exercised all 10.0 million warrants for cash at $6.00 per common share. The exercise price of the warrants was also subject to downward adjustment if the weighted-average purchase price of all additional common shares sold, as defined, from the date of issuance of the applicable warrant was less than $6.00 per share (herein, along with the share issuances, referred to as “Downward Price Protection Provisions”).

On April 9, 2009, the Company’s shareholders approved the sale of the common shares and warrants to the Otto Family in connection with the Otto Transaction. The transaction was completed in two closings, May 2009 and September 2009. In May 2009, the Company issued and sold 15.0 million common shares and warrants to purchase 5.0 million common shares to the Otto Family for a purchase price of $52.5 million. The Company also issued an additional 1,071,428 common shares to the Otto Family as a result of the first quarter 2009 dividend associated with the initial 15.0 million common shares. In September 2009, the Company issued and sold 15.0 million common shares and warrants to purchase 5.0 million common shares to the Otto Family for a purchase price of $60.0 million. The Company also issued an additional 1,787,304 common shares to the Otto Family as a result of the first and second quarter 2009 dividends associated with the second 15.0 million shares. In total, the Company issued 32,858,732 common shares to the Otto Family in 2009.

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Equity Derivative Instruments — Otto Transaction

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

The fair value of the Company’s equity derivative instruments (warrants) was classified on the Company’s balance sheet as Equity Derivative Liability-Affiliate and had a fair value of $74.3 million at March 18, 2011, the exercise date. Upon exercise and issuance of common shares, this liability was reclassified to paid-in capital and aggregated with the cash proceeds in the consolidated statement of equity.

The table below presents the fair value of the Company’s equity derivative instruments as well as their classification on the consolidated balance sheet as follows (in millions):

	Liability Derivatives
	December 31, 2011			December 31, 2010
Derivatives Not Designated as Hedging Instruments	Balance Sheet Location	Fair Value		Balance Sheet Location	Fair Value
Warrants	Equity derivative liability	$	—	Equity derivative liability	$	96.2

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

Derivatives Not Designated as Hedging Instruments		Year Ended December 31,
	Income Statement Location	2011		2010			2009
Warrants	Gain (loss) on equity derivative instruments	$	21.9	$	(40.1	)	$	(46.9	)
Equity forward — issued shares	Gain (loss) on equity derivative instruments		—		—			(152.9	)
		$	21.9	$	(40.1	)	$	(199.8	)

The gain/loss above for these contracts was derived principally from the changes in the Company’s stock price from April 9, 2009, the shareholder approval date, through December 31, 2010 or March 18, 2011, the exercise date of the warrants.

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

The valuation of these instruments was determined using an option pricing model that considered all relevant assumptions including the Downward Price Protection Provisions. The two key unobservable input assumptions included in the valuation of the warrants were the volatility and dividend yield. Both measures were susceptible to change over time given the impact of movements in the Company’s common share price on each. The dividend yield assumptions used ranged from 3.0% to 3.2% through the exercise date in 2011, from 2.4% to 4.2% in 2010 and from 3.9% to 9.8% in 2009. Since the initial valuation date, the Company used historical volatility assumptions to determine the estimate of fair value of the five-year warrants. The Company believed that the long-term historic volatility better represented the long-term future volatility and was more consistent with how an investor would view the value of these securities. The Company continually reassessed these assumptions and reviewed the assumptions again in March 2011 upon notification from the Otto Family regarding its exercise of the warrants. The Company determined that an implied volatility assumption was more representative of how a market participant would value the instruments given the shorter term nature of the warrants. The volatility assumptions used were 36.6% in the first quarter of 2011, 79.1% in 2010 and 77.0% in 2009. The Company determined that the warrants fell within Level 3 of the fair value hierarchy due to the volatility and dividend yield assumptions used in the overall valuation.

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The following table presents information about the Company’s equity derivative instruments (in millions) which was a liability at December 31, 2010 and 2009, measured at fair value on a recurring basis as of December 31, 2010 and 2009, and indicates the fair value hierarchy of the valuation techniques used by the Company to determine such fair value (in millions).

	Fair Value Measurements
	Level 1		Level 2		Level 3		Total
December 31, 2010
Warrants	$	—	$	—	$	96.2	$	96.2
December 31, 2009
Warrants	$	—	$	—	$	56.1	$	56.1

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

	Equity Derivative Instruments— Liability
Balance of Level 3 at January 1, 2009	$	—
Initial valuation		9.2
Unrealized loss		46.9
Balance of Level 3 at December 31, 2009	$	56.1
Unrealized loss		40.1
Balance of Level 3 at December 31, 2010	$	96.2
Unrealized gain		(21.9	)
Transfer out of liability to paid-in capital		(74.3	)
Balance of Level 3 at December 31, 2011	$	—

11.    Impairment Charges and Impairment of Joint Venture Investments

Due to the then-continued deterioration of the U.S. capital markets in 2008, the lack of liquidity and the related impact on the real estate market and retail industry that accelerated through the end of 2009, as well as changes in the Company’s hold period assumptions triggered by these factors, the Company determined that certain of its consolidated real estate investments and unconsolidated joint venture investments were impaired. As a result, the Company recorded impairment charges on the following consolidated assets and unconsolidated joint venture investments (in millions):

	For the Year Ended December 31,
	2011		2010		2009
Land held for development(A)	$	54.2	$	54.3	$	—
Undeveloped land(B)		9.0		30.5		0.4
Assets marketed for sale(C)		4.7		—		11.8
Total continuing operations	$	67.9	$	84.8	$	12.2
Sold assets or assets held for sale		57.9		51.8		73.8
Assets formerly occupied by Mervyns(D)		—		35.3		68.7
Total discontinued operations	$	57.9	$	87.1	$	142.5
Joint venture investments(E)		2.9		0.2		184.6
Total impairment charges	$	128.7	$	172.1	$	339.3

(A) Amounts reported in the year ended December 31, 2011, primarily related to land held for development in Russia (the “Yaroslavl Project”) and Canada that are owned through consolidated joint ventures.

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The Company’s proportionate share of the loss was approximately $50.4 million after adjusting for the allocation of loss to the non-controlling interest in certain of the projects. The asset impairments primarily were triggered by the Company’s decision to dispose of its interest in lieu of development for certain of the projects and the related execution of agreements for the sale or partial sale of its interest in these projects. The Company subsequently sold its interest in the land held for development in Brampton, Canada, in the fourth quarter of 2011 to its joint venture partner in the project.

Amounts reported in the year ended December 31, 2010, are primarily related to land held for development in Russia, which is owned through a consolidated joint venture. The Company’s proportionate share of the loss was $41.9 million after adjusting for the allocation of loss to the non-controlling interest. The asset impairments were triggered in the second quarter of 2010 primarily due to a change in the Company’s investment plans for these projects.

(B) Amounts reported in 2010 include a $19.3 million impairment charge associated with an abandoned development project. A subsidiary of the Company’s TRS acquired a leasehold interest in a development project located in Norwood, Massachusetts, as part of a portfolio acquisition in 2003 and no longer expects to fund the ground rent expense. The ground lease was subsequently terminated in 2011.

(C) These charges were triggered primarily due to the Company’s marketing of these assets for sale and management’s assessment of the likelihood and timing of a sale.

(D) As discussed in Notes 1 and 12, these assets were deconsolidated in 2010 and all operating results have been reclassified as discontinued operations.

For the years ended December 31, 2010 and 2009, the Company’s proportionate share of these impairment charges was $16.5 million and $33.6 million, respectively, after adjusting for the allocation of loss to the non-controlling interest in this previously consolidated joint venture. The 2010 impairment charges were triggered primarily due to a change in the Company’s business plans for these assets and the resulting impact on its holding period assumptions for this substantially vacant portfolio. During 2010, the Company determined it was no longer committed to the long-term management and investment in these assets. The 2009 impairment charges were triggered primarily due to the Company’s marketing of certain assets for sale combined with the overall economic downturn in the retail real estate environment that existed at the time. A full write-down of this portfolio was not recorded in 2009 due to the Company’s then-holding period assumptions and future investment plans for these assets.

(E) These charges were recognized because these investments incurred an “other than temporary impairment.”

Measurement of Fair Value

The Company is required to assess the fair value of certain impaired consolidated and unconsolidated joint venture investments. The valuation of impaired real estate assets and investments is determined using widely accepted valuation techniques including discounted cash flow analysis on the expected cash flows of each asset as well as the income capitalization approach considering prevailing market capitalization rates, analysis of recent comparable sales transactions, actual sales negotiations and bona fide purchase offers received from third parties and/or consideration of the amount that currently would be required to replace the asset, as adjusted for obsolescence. In general, the Company considers multiple valuation techniques when measuring fair value of an investment. However, in certain circumstances, a single valuation technique may be appropriate.

For operational real estate assets, the significant assumptions included the capitalization rate used in the income capitalization valuation as well as the projected property net operating income. For projects under development, the significant assumptions included the discount rate, the timing and the estimated costs for the construction completion and project stabilization, projected net operating income and the exit capitalization rate. For investments in unconsolidated joint ventures, the Company also considered the valuation of any underlying joint venture debt. These valuation adjustments were calculated based on market conditions and assumptions made by management at the time the valuation adjustments were recorded, which may differ materially from actual results if market conditions or the underlying assumptions change.

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Items Measured at Fair Value on a Non-Recurring Basis

The following table presents information about the Company’s impairment charges on both financial and nonfinancial assets that were measured on a fair value basis for the years ended December 31, 2011, 2010 and 2009. The table also indicates the fair value hierarchy of the valuation techniques used by the Company to determine such fair value (in millions).

	Fair Value Measurements
	Level 1		Level 2		Level 3		Total		Total Losses
December 31, 2011
Long-lived assets held and used and held for sale	$	—	$	—	$	212.0	$	212.0	$	125.8
Unconsolidated joint venture investments		—		—		5.5		5.5		2.9
December 31, 2010
Long-lived assets held and used		—		—		229.2		229.2		171.9
Unconsolidated joint venture investments		—		—		—		—		0.2
December 31, 2009
Long-lived assets held and used		—		—		251.6		251.6		154.7
Unconsolidated joint venture investments		—		—		96.6		96.6		184.6

12.    Discontinued Operations and Disposition of Real Estate and Real Estate Investments

Discontinued Operations

During the year ended December 31, 2011, the Company sold 34 properties that were classified as discontinued operations for the years ended December 31, 2011, 2010 and 2009. The Company had one asset considered held for sale at December 31, 2011. In addition, during the period from January 1, 2012 through June 30, 2012, the Company sold 21 properties (including the one asset considered held for sale at December 31, 2011) and had one asset considered held for sale at June 30, 2012.

Included in discontinued operations for the three years ended December 31, 2011, are 118 properties (including the deconsolidated properties noted below). Of these properties, 113 were previously included in the shopping center segment, and five of these properties were previously included in the other investments segment (Note 17). In addition, included in discontinued operations are 26 other properties that were deconsolidated for accounting purposes in 2011 and 2010, which primarily represented the activity associated with the joint venture that owns the underlying real estate formerly occupied by Mervyns. The operations of these properties were classified as discontinued operations for all periods presented, as the Company has no significant continuing involvement.

The balance sheet related to the asset held for sale and the operating results related to assets sold, designated as held for sale or deconsolidated as of December 31, 2011, are as follows (in thousands):

	December 31, 2011
Land	$	1,089
Building		1,178
Fixtures and tenant improvements		1,000
		3,267
Less: Accumulated depreciation		(977	)
Total real estate held for sale	$	2,290

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	For the Year Ended December 31,
	2011			2010			2009
Revenues	$	44,883		$	68,722		$	104,727
Operating expenses		17,984			30,714			48,342
Impairment charges		57,931			87,045			142,473
Interest, net		12,105			25,725			37,992
Debt extinguishment costs, net		7,191			409			467
Depreciation and amortization		13,512			23,479			39,656
		108,723			167,372			268,930
Loss from discontinued operations		(63,840	)		(98,650	)		(164,203	)
Gain on deconsolidation of interests		4,716			5,221			—
Gain (loss) on disposition of real estate, net of tax		40,163			5,775			(24,027	)
Loss from discontinued operations	$	(18,961	)	$	(87,654	)	$	(188,230	)

Disposition of Real Estate and Real Estate Investments

The Company recorded net gains on disposition of real estate and real estate investments as follows (in millions):

	For the Year Ended December 31
	2011			2010		2009
Land sales(A)	$	(0.4	)	$	1.0	$	4.8
Previously deferred gains and other gains and losses on dispositions(B)		7.5			0.3		4.3
	$	7.1		$	1.3	$	9.1

(A) These dispositions did not meet the criteria for discontinued operations, as the land did not have any significant operations prior to disposition.

(B) These gains are a result of partial asset sales that did not meet the criteria for discontinued operations and assets that were contributed to joint ventures in prior years.

13.    Transactions with Related Parties

In September 2010, the Company funded a $31.7 million mezzanine loan to a subsidiary of EDT Retail Trust (“EDT”) collateralized by equity interests in six shopping center assets managed by the Company. The mezzanine loan bears interest at a fixed rate of 10% and matures in 2017. The Company recorded $3.2 million and $0.9 million in interest income for the year ended December 31, 2011 and 2010, respectively. Although the Company’s interest in EDT was redeemed in 2009, the Company retained two positions on EDT’s board of directors.

In 2009, the Company completed the Otto Transaction (Note 10). Mr. Otto is currently the Chief Executive Officer of ECE Projektmanagement G.m.b.H. & Co. KG (“ECE”), which is a fully integrated international developer, owner and manager of shopping centers. In May 2007, DDR and ECE formed a joint venture to fund investments in new retail developments to be located in western Russia and Ukraine (“ECE Joint Venture”). DDR contributed 75% of the equity of the joint venture, and ECE contributed the remaining 25% of the equity. The Company consolidates this entity. ECE, through its wholly-owned affiliates, was to provide development, property management, leasing and asset management services to the ECE Joint Venture and be paid fees, pursuant to service agreements. In addition, two of the Company’s directors hold various positions with affiliates of ECE, the Otto Family and/or the ECE Joint Venture’s general partner.

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In 2011, the ECE Joint Venture entered into an agreement to sell the Yaroslavl Project (Note 11). In connection with the sale, an affiliate of the Company’s joint venture partner entered into certain leasing and management agreements with the buyer of the Yaroslavl Project and will receive fees in exchange for its services. The sale is expected to be finalized in the first quarter of 2012.

In April 2009, the Company entered into a $60 million secured bridge loan with an affiliate of the Otto Family. The bridge loan was repaid in May 2009 with the proceeds of a $60 million collateralized loan also obtained from an affiliate of the Otto Family. The loan had an interest rate of 9% and was collateralized by a shopping center. The Company repaid this loan, at par, in 2010 and paid a prepayment penalty of approximately $0.9 million. The Company paid interest of approximately $1.9 million and $3.9 million on these loans for the years ended December 31, 2010 and 2009, respectively.

The Company leased office space owned by the Company’s former Executive Chairman of the Board’s mother. General and administrative rental expense associated with this office space aggregated $0.5 million for the year ended December 31, 2009. This office lease expired on December 31, 2009.

Transactions with the Company’s equity affiliates are described in Note 2.

14.    Benefit Plans

Stock-Based Compensation

The Company’s equity-based award plans provide for grants to Company employees and directors of incentive and non-qualified options to purchase common shares, rights to receive the appreciation in value of common shares, awards of common shares subject to restrictions on transfer, awards of common shares issuable in the future upon satisfaction of certain conditions and rights to purchase common shares and other awards based on common shares. Under the terms of the plans, awards available for grant approximated 1.9 million common shares at December 31, 2011.

During 2011, 2010 and 2009, approximately $6.8 million, $5.7 million and $17.4 million, respectively, was charged to expense associated with awards under the Company’s equity-based award plans. This charge is included in general and administrative expenses in the Company’s consolidated statements of operations.

Stock Options

Stock options may be granted at per-share prices not less than fair market value at the date of grant and must be exercised within the maximum contractual term of 10 years thereof. Options granted under the plans generally vest over three years in one-third increments, beginning one year after the date of grant.

In previous years, the Company granted options to its directors. Options are no longer granted to the Company’s directors. Such options were granted at the fair market value of the Company’s common shares on the date of grant. All of the options granted to the directors are currently exercisable.

The fair values for option awards granted in 2011, 2010 and 2009 were estimated at the date of grant using the Black-Scholes option pricing model with the following weighted-average assumptions:

	For the Year Ended December 31,
	2011	2010	2009
Weighted-average fair value of grants	$5.63	$5.30	$2.21
Risk-free interest rate (range)	1.4% - 3.0%	1.4% - 2.6%	1.1% - 2.7%
Dividend yield (range)	3.4% - 4.9%	4.2% - 5.6%	8.6% - 24.9%
Expected life (range)	7 years	4 - 5 years	3 - 6 years
Expected volatility (range)	52.1% - 69.0%	87.0% - 97.8%	58.0% - 93.8%

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The risk-free rate was based upon a U.S. Treasury Strip with a maturity date that approximates the expected term of the award. The expected life of the award was derived by referring to actual exercise experience. The expected volatility of the stock was derived by using a 50/50 blend of implied and historical changes in the Company’s historical stock prices over a time frame consistent with the expected life of the award.

The following table reflects the stock option activity described above (aggregate intrinsic value in thousands):

							Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term (years)		Aggregate Intrinsic Value
	Number of Options
	Employees			Directors
	(thousands)
Balance December 31, 2008		2,185			32		$	41.97
Granted		1,415			—			6.00
Exercised		(149	)		—			5.83
Forfeited		(121	)		(10	)		25.10
Balance December 31, 2009		3,330			22		$	29.02
Granted		373			—			10.37
Exercised		(212	)		—			6.02
Forfeited		(268	)		(2	)		30.21
Balance December 31, 2010		3,223			20		$	28.28
Granted		276			—			13.72
Exercised		(192	)		—			6.39
Forfeited		(624	)		(10	)		41.02
Balance December 31, 2011		2,683			10		$	25.35		5.8	$	5,552
Options exercisable at December 31,
2011		2,230			10		$	28.00		5.2	$	5,177
2010		2,900			20		$	30.27		5.8	$	8,035
2009		3,329			22		$	29.02		6.8	$	3,947

The following table summarizes the characteristics of the options outstanding at December 31, 2011 (in thousands):

Options Outstanding
Range of Exercise Prices	Outstanding as of 12/31/11		Weighted- Average Remaining Contractual Life (years)		Weighted- Average Exercise Price
							Options Exercisable
							Exercisable as of 12/31/11		Weighted- Average Exercise Price
$ 0.00-$6.50		813		6.8	$	6.01		813	$	6.01
$ 6.51-$12.50		298		8.2		10.33		95		10.34
$12.51-$29.50		385		6.2		16.95		135		22.71
$29.51-$49.50		827		4.2		38.22		827		38.22
$49.51-$69.50		370		4.8		59.88		370		59.88
		2,693		5.8	$	25.35		2,240	$	28.00

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The following table reflects the activity for unvested stock option awards for the years ended (in thousands):

	Options			Weighted- Average Grant Date Fair Value
Unvested at December 31, 2010		323		$	5.22
Granted		276			5.42
Vested		(104	)		5.23
Forfeited		(42	)		5.23
Unvested at December 31, 2011		453		$	5.34

As of December 31, 2011, total unrecognized stock option compensation cost granted under the plans was $1.7 million and is expected to be recognized over a weighted-average 1.8-year term.

Exercises of Employee Stock Options

The total intrinsic value of options exercised for the year ended December 31, 2011, was approximately $1.4 million. The total cash received from employees as a result of employee stock option exercises for the year ended December 31, 2011, was approximately $2.0 million. The Company settles employee stock option exercises primarily with newly issued common shares or with treasury shares, if available.

Restricted Stock Awards

In 2011, 2010 and 2009, the Board of Directors approved grants of 238,365; 573,100 and 2,109,798 restricted common shares, respectively, to executives of the Company. The restricted stock grants generally vest in equal annual amounts over a four-year period. Restricted shares awards have the same cash dividend and voting rights as other common stock and are considered to be currently issued and outstanding. These grants have a weighted-average fair value at the date of grant ranging from $5.08 to $14.42, which was equal to the market value of the Company’s common shares at the date of grant. In 2011, 2010 and 2009, grants of 53,298; 72,901 and 111,181 common shares, respectively, were issued as compensation to the Company’s outside directors. These grants were issued equal to the market value of the Company’s common shares at the date of grant and immediately vested upon grant.

The following table reflects the activity for unvested restricted stock awards for the year ended December 31, 2011 (awards in thousands):

	Awards			Weighted- average Grant Date Fair Value
Unvested at December 31, 2010		1,146		$	6.97
Granted		238			13.73
Vested		(508	)		6.91
Forfeited		(148	)		6.41
Unvested at December 31, 2011		728		$	9.31

As of December 31, 2011, total unrecognized compensation of restricted stock award arrangements granted under the plans was $6.8 million and is expected to be recognized over a weighted-average, 2.7-year term.

Value Sharing Equity Program

In July 2009, the Company’s Board of Directors approved and adopted the Value Sharing Equity Program (the “VSEP”) and the grant of awards to certain of the Company’s executives. The VSEP is designed to allow the Company to reward participants with a portion of “Value Created” (as described below).

F-47

On six specified measurement dates (July 31, 2010, January 31, 2011, July 31, 2011, January 31, 2012, July 31, 2012 and December 31, 2012), the Company will measure the Value Created during the period between the start of the VSEP and the applicable measurement date. Value Created is measured as the increase in the Company’s market capitalization (i.e., the product of the Company’s share price and the number of shares outstanding as of the measurement date), as adjusted for any equity issuances or equity repurchases between the start of the VSEP and the applicable measurement date.

Each participant was assigned a “percentage share” of the Value Created. After the first measurement date, each participant will receive a number of the Company’s common shares with an aggregate value equal to two-sevenths of the participant’s percentage share of the Value Created. After each of the next four measurement dates, each participant will receive a number of Company shares with an aggregate value equal to three-sevenths, then four-sevenths, then five-sevenths and then six-sevenths of the participant’s percentage share of the Value Created. After the final measurement date, each participant will receive a number of the Company’s common shares with an aggregate value equal to the participant’s full percentage share of the Value Created. For each measurement date, however, the number of the Company’s common shares awarded to a participant will be reduced by the number of the Company’s common shares previously earned by the participant as of prior measurement dates. This will keep the participants from benefiting more than once for increases in the shares price of the Company’s common shares that occurred during earlier measurement periods.

The Company’s common shares granted to a participant will then be subject to an additional time-based vesting period. During this period, the Company’s common shares will generally vest in 20% annual increments beginning on the date of grant and on each of the first four anniversaries of the date of grant.

The fair value of the VSEP grants was estimated on the date of grant using a Monte Carlo approach model based on the following assumptions:

	Range
Risk-free interest rate	1.9%
Dividend yield	6.2%
Expected life	3.4 years
Expected volatility	88%

The following table reflects the activity for unvested VSEP awards for the year ended (in thousands):

	Awards			Weighted- Average Grant Date Fair Value
Unvested at December 31, 2010		714		$	11.35
Granted		1,442			14.16
Vested		(764	)		13.09
Forfeited		(210	)		12.94
Unvested at December 31, 2011		1,182		$	13.34

As of December 31, 2011, $4.7 million of total unrecognized compensation costs was related to the two market-metric components associated with the awards granted under the VSEP and are expected to be recognized over the remaining five-year term, which includes the vesting period.

F-48

Stock-Based Compensation — Change in Control

In April 2009, the Otto Transaction was approved by the Company’s shareholders, resulting in a “potential change in control” under the Company’s equity-based award plans. In addition, in September 2009, as a result of the second closing in which the Otto Family acquired beneficial ownership of more than 20% of the Company’s outstanding common shares, a “change in control” was deemed to have occurred under the Company’s equity deferred compensation plans. In accordance with the equity-based award plans, all unvested stock options that were not subject to deferral elections became fully exercisable, all restrictions on unvested restricted shares lapsed, and, in accordance with the equity deferred compensation plans, all unvested deferred stock units vested and were no longer subject to forfeiture. As such, the Company recorded accelerated non-cash charges aggregating approximately $15.4 million for the year ended December 31, 2009, related to these equity awards. This charge is included in general and administrative expenses in the Company’s consolidated statement of operations.

401(k) Plan

The Company has a 401(k) defined contribution plan covering substantially all of the officers and employees of the Company that permits participants to defer up to a maximum of 50% of their compensation subject to statutory limits. The Company matches the participant’s contribution in an amount equal to 50% of the participant’s elective deferral for the plan year up to a maximum of 6% of a participant’s base salary plus annual cash bonus, not to exceed the sum of 3% of the participant’s base salary plus annual cash bonus. The Company’s plan allows for the Company to make additional discretionary contributions. No discretionary contributions have been made. Employees’ contributions are fully vested, and the Company’s matching contributions vest 20% per year over five years. The Company funds all matching contributions with cash. The Company’s contributions for each of the three years ended December 31, 2011, 2010 and 2009, were $1.1 million, $1.1 million and $1.0 million, respectively. The 401(k) plan is fully funded at December 31, 2011.

Elective Deferred Compensation Plan

The Company has a non-qualified elective deferred compensation plan (“Elective Deferred Compensation Plan”) for certain officers that permits participants to defer up to 100% of their base salaries and annual performance-based cash bonuses, less applicable taxes and benefits deductions. The Company provides a matching contribution to any participant who has contributed the maximum permitted under the 401(k) plan. This matching contribution is equal to the difference between (a) 3% of the sum of the participant’s base salary and annual performance-based bonus deferred under the 401(k) plan and the deferred compensation combined and (b) the actual employer matching contribution under the 401(k) plan. Deferred compensation related to an employee contribution is charged to expense and is fully vested. Deferred compensation related to the Company’s matching contribution is charged to expense and vests 20% per year. Once an employee has been with the Company five years, all matching contributions are fully vested. The Company’s contributions were $0.1 million for both of the years ended December 31, 2011 and 2010 (not material in 2009). At December 31, 2011 and 2010, deferred compensation under the Elective Deferred Compensation Plan aggregated approximately $2.7 and $2.8 million, respectively. The Elective Deferred Compensation Plan is fully funded at December 31, 2011.

Equity Deferred Compensation Plan

The Company maintains the DDR Corp. Equity Deferred Compensation Plan (the “Equity Deferred Compensation Plan”), a non-qualified compensation plan for certain officers and directors of the Company to defer the receipt of restricted shares. At December 31, 2011 and 2010, there were 0.4 million common shares of the Company in the Equity Deferred Compensation Plan valued at $4.9 million and $5.5 million, respectively. The Equity Deferred Compensation Plan was fully funded at December 31, 2011.

Vesting of restricted shares grants of approximately 0.1 million, 0.1 million and 0.2 million common shares in 2011, 2010 and 2009, respectively, was deferred through the Equity Deferred Compensation Plan. The Company recorded $1.4 million, $1.2 million and $6.7 million in 2011, 2010 and 2009, respectively, in equity as deferred compensation obligations for the vested restricted shares deferred into the Equity Deferred Compensation Plan.

F-49

In 2011 and 2010, certain officers elected to have their deferred compensation distributed, which resulted in a reduction of the deferred obligation of approximately $2.3 million and $5.5 million, respectively. In 2009, in accordance with the transition rules under Section 409A of the Internal Revenue Code and the change in control that occurred in September 2009, certain officers and directors elected to have their deferrals distributed, which resulted in a reduction of the deferred obligation and a corresponding increase in paid-in capital of approximately $2.8 million.

Directors’ Deferred Compensation Plan

In 2000, the Company established the Directors’ Deferred Compensation Plan (the “Directors Plan”), a non-qualified compensation plan for the directors of the Company to defer the receipt of quarterly compensation. At December 31, 2011 and 2010, there were 0.3 million common shares of the Company in the Directors Plan valued at $3.7 million in both years. The Directors Plan was fully funded at December 31, 2011.

15.    Earnings and Dividends Per Share

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

	For the Year Ended December 31,
	2011			2010			2009
Basic Earnings:
Continuing Operations:
Loss from continuing operations	$	(7,515	)	$	(161,385	)	$	(224,537	)
Plus: Gain on disposition of real estate		7,079			1,318			9,127
Plus: Income (loss) attributable to non-controlling interests		3,543			12,071			(711	)
Income (loss) from continuing operations attributable to DDR		3,107			(147,996	)		(216,121	)
Write-off of preferred share original issuance costs		(6,402	)		—			—
Preferred dividends		(31,587	)		(42,269	)		(42,269	)
Basic — Loss from continuing operations attributable to DDR common shareholders		(34,882	)		(190,265	)		(258,390	)
Less: Earnings attributable to unvested shares and operating partnership units		(488	)		(155	)		(259	)
Basic — Loss from continuing operations	$	(35,370	)	$	(190,420	)	$	(258,649	)
Discontinued Operations:
Loss from discontinued operations		(18,961	)		(87,654	)		(188,230	)
Plus: Income attributable to non-controlling interests		—			26,292			47,758
Basic — Loss from discontinued operations		(18,961	)		(61,362	)		(140,472	)
Basic — Net loss attributable to DDR common shareholders after allocation to participating securities	$	(54,331	)	$	(251,782	)	$	(399,121	)

F-50

	For the Year Ended December 31,
	2011			2010			2009
Diluted Earnings:
Continuing Operations:
Basic — Loss from continuing operations attributable to DDR common shareholders	$	(34,882	)	$	(190,265	)	$	(258,390	)
Less: Fair value of Otto Family warrants		(21,926	)		—			—
Less: Earnings attributable to unvested shares and operating partnership units		(488	)		(155	)		(259	)
Diluted — Loss from continuing operations	$	(57,296	)	$	(190,420	)	$	(258,649	)
Discontinued Operations:
Basic — Loss from discontinued operations		(18,961	)		(61,362	)		(140,472	)
Diluted — Net loss attributable to DDR common shareholders after allocation to participating securities	$	(76,257	)	$	(251,782	)	$	(399,121	)
Number of Shares:
Basic — Average shares outstanding		270,278			244,712			158,816
Effective of dilutive securities — Warrants		1,194			—			—
Diluted — Average shares outstanding		271,472			244,712			158,816
Basic Earnings Per Share:
Loss from continuing operations attributable to DDR common shareholders	$	(0.13	)	$	(0.78	)	$	(1.63	)
Loss from discontinued operations attributable to DDR common shareholders		(0.07	)		(0.25	)		(0.88	)
Net loss attributable to DDR common shareholders	$	(0.20	)	$	(1.03	)	$	(2.51	)
Dilutive Earnings Per Share:
Loss from continuing operations attributable to DDR common shareholders	$	(0.21	)	$	(0.78	)	$	(1.63	)
Loss from discontinued operations attributable to DDR common shareholders		(0.07	)		(0.25	)		(0.88	)
Net loss attributable to DDR common shareholders	$	(0.28	)	$	(1.03	)	$	(2.51	)

Basic average shares outstanding do not include restricted shares totaling 1,912,736; 1,860,064 and 1,143,000 that were not vested at December 31, 2011, 2010, and 2009, respectively.

Dilutive Securities:

• Warrants to purchase 10.0 million common shares issued in 2009 were dilutive for 2011 and are included in the calculation of diluted EPS. In 2010 and 2009, these warrants were not included in the computation of diluted EPS, as the warrants were anti-dilutive. The warrants were exercised in March 2011. The 15.0 million common shares issued in May 2009 and the 15.0 million common shares issued in September 2009 related to the Otto Transaction were included in basic and diluted EPS from the date of issuance (Note 10).

Anti-Dilutive Securities:

• Options to purchase 2.7 million, 3.2 million and 3.4 million common shares were outstanding at December 31, 2011, 2010 and 2009, respectively (Note 14). These outstanding options were not considered in the computation of diluted EPS for all of the periods presented, as the options were anti-dilutive due to the Company’s loss from continuing operations.

F-51

• Shares subject to issuance under the Company’s VSEP (Note 14) were not included in the computation of diluted EPS for all periods presented because the shares were considered anti-dilutive due to the Company’s loss from continuing operations.

• The exchange into common shares associated with OP Units was not included in the computation of diluted shares outstanding for 2011, 2010 or 2009 because the effect of assuming conversion was anti-dilutive (Note 10).

• The Company’s two series of Senior Convertible Notes due 2012 and 2040, which are convertible into common shares of the Company with conversion prices of approximately $74.56 and $16.19, respectively, at December 31, 2011, were not included in the computation of diluted EPS for 2011, 2010 and 2009 because the Company’s common share price did not exceed the conversion prices of the conversion features (Note 7) in these periods and would therefore be anti-dilutive. The Senior Convertible Notes due 2040 were not outstanding at December 31, 2009. The Company’s Senior Convertible Notes due 2011, which were convertible into common shares of the Company at a conversion price of approximately $64.23 at December 31, 2010 and 2009, were not included in the computation of diluted EPS for 2011, 2010 and 2009 because the Company’s common share price did not exceed the conversion prices of the conversion features in these periods and would therefore be anti-dilutive. The Senior Convertible Notes due 2011 were repaid at maturity in August 2011. In addition, the purchased options related to two of the Senior Convertible Notes due 2011 and 2012 were not included in the computation of diluted EPS for all periods presented, as the purchase options were anti-dilutive.

• The forward equity agreement entered into in March 2011 for 9.5 million common shares was not included in the computation of diluted EPS using the treasury stock method for the year ended December 31, 2011, due to the Company’s loss from continuing operations. These shares were issued in April 2011. This agreement was not in effect in 2010 and 2009.

16.    Income Taxes

The Company elected to be treated as a REIT under the Internal Revenue Code of 1986, as amended, commencing with its taxable year ended December 31, 1993. To qualify as a REIT, the Company must meet a number of organizational and operational requirements, including a requirement that the Company distribute at least 90% of its taxable income to its shareholders. It is management’s current intention to adhere to these requirements and maintain the Company’s REIT status. As a REIT, the Company generally will not be subject to corporate level federal income tax on taxable income it distributes to its shareholders. As the Company distributed sufficient taxable income for the three years ended December 31, 2011, no U.S. federal income or excise taxes were incurred.

If the Company fails to qualify as a REIT in any taxable year, it will be subject to federal income taxes at regular corporate rates (including any alternative minimum tax) and may not be able to qualify as a REIT for the four subsequent taxable years. Even if the Company qualifies for taxation as a REIT, the Company may be subject to certain state and local taxes on its income and property and to federal income and excise taxes on its undistributed taxable income. In addition, at December 31, 2011, the Company has taxable REIT subsidiaries that generate taxable income from non-REIT activities and is subject to federal, state and local income taxes.

In order to maintain its REIT status, the Company must meet certain income tests to ensure that its gross income consists of passive income and not income from the active conduct of a trade or business. The Company utilizes its TRS to the extent certain fee and other miscellaneous non-real estate-related income cannot be earned by the REIT.

At December 31, 2011, 2010 and 2009, the tax cost basis of assets was approximately $8.5 billion, $8.6 billion and $9.0 billion, respectively. For the years ended December 31, 2011 and 2010, the Company recorded a net refund of approximately $0.5 million and $2.1 million, respectively. For the year ended December 31, 2009, the Company paid taxes of approximately $2.8 million. These amounts reflect taxes paid to federal and state authorities for franchise and other taxes.

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The following represents the combined activity of the Company’s TRS (in thousands):

	For the Year Ended December 31,
	2011		2010			2009
Book income (loss) before income taxes	$	4,738	$	(22,843	)	$	(19,104	)

Components of income tax expense (benefit) are as follows:

Current:
Federal	$	351	$	(1,775	)	$	(1,614	)
State and local		—		—			—
		351		(1,775	)		(1,614	)
Deferred:
Federal		—		45,311			(5,810	)
State and local		—		6,663			(855	)
		—		51,974			(6,665	)
Total expense (benefit)	$	351	$	50,199		$	(8,279	)

At December 31, 2011, the Company had net deferred tax assets of approximately $57.6 million, which included $25.7 million attributed to net operating loss carryforwards that expire in varying amounts between the years 2017 through 2030. Realization of the net deferred tax assets is dependent on the existence of significant positive evidence, such as the Company’s ability to generate sufficient income to utilize the deferred tax assets within the relevant carryforward periods.

Over the past several years, the Company has initiated various tax actions within the TRS that generated income (“Tax Actions”). These Tax Actions were initiated based upon management’s expectations of the REIT’s future liquidity and cash flow strategies. Management regularly assesses established reserves and adjusts these reserves when facts and circumstances indicate that a change in estimate is necessary. Due to the Company’s continued progress in raising capital over the past several years and expected improvements within its core operating results, it discontinued initiating these actions during the second half of 2010 and expects that it is unlikely that these Tax Actions will be used in future periods. In addition, throughout 2010, the Company continued to experience unexpected adverse charges within its TRS. During the fourth quarter of 2010, the TRS recorded an impairment charge of $19.3 million and a $3.0 million lease liability charge related to a development project that the Company no longer planned to pursue, which resulted in a loss within the TRS for the year ended December 31, 2010. As of December 31, 2010, the Company had a three-year cumulative pre-tax book loss, adjusted for permanent differences. This, in conjunction with the historical and continued volatility of the activities within the TRS, is sufficient negative evidence that a future benefit of the deferred tax asset may not exist. As such, management believed that it was more-likely-than-not that the deferred tax assets would not be used in future years, and, accordingly, a full valuation allowance against those deferred tax assets was recorded at December 31, 2010. The valuation allowance balances as of December 31, 2011 and 2010 were $57.6 million and $58.3 million, respectively.

F-53

The differences between total income tax expense or benefit and the amount computed by applying the statutory federal income tax rate to income before taxes were as follows (in thousands):

	For the Year Ended December 31,
	2011			2010			2009
Statutory rate of 34% applied to pre-tax income (loss)	$	1,611		$	(7,767	)	$	(6,495	)
Effect of state and local income taxes, net of federal tax benefit		237			(1,142	)		(955	)
Valuation allowance (decrease) increase		(715	)		58,322			—
Other		(782	)		786			(829	)
Total expense (benefit)	$	351		$	50,199		$	(8,279	)
Effective tax rate		7.40	%		(219.76	)%(A)		43.34	%

(A) The 2010 effective tax rate includes the impact from the recording of the valuation allowance in the fourth quarter 2010. Without this impact, the effective tax rate was approximately 37.59%.

Deferred tax assets and liabilities of the Company’s TRS were as follows (in thousands):

	For the Year Ended December 31,
	2011			2010			2009
Deferred tax assets	$	58,297		$	58,923		$	52,671
Deferred tax liabilities		(690	)		(601	)		(775	)
Valuation allowance		(57,607	)		(58,322	)		—
Net deferred tax asset(A)	$	—		$	—		$	51,896

(A) The components of the net deferred tax assets are primarily attributable to net operating losses, interest expense, subject to limitations and basis differentials in assets due to purchase price accounting.

F-54

Reconciliation of GAAP net loss attributable to DDR to taxable income is as follows (in thousands):

	For the Year Ended December 31,
	2011			2010			2009
GAAP net loss attributable to DDR	$	(15,854	)	$	(209,358	)	$	(356,593	)
Plus: Book depreciation and amortization(A)		222,751			217,035			221,119
Less: Tax depreciation and amortization(A)		(181,935	)		(179,377	)		(171,684	)
Book/tax differences on gains/losses from capital transactions		(116,395	)		(103,331	)		(131,909	)
Joint venture equity in earnings (loss), net(A)		19,190			(28,659	)		(4,194	)
Dividends from subsidiary REIT investments		954			1,609			2,833
Deferred income		(4,327	)		1,937			(2,734	)
Compensation expense		(17,614	)		1,199			19,122
Impairment charges		128,765			172,127			339,303
Equity derivative instrument valuation		(21,926	)		40,157			199,797
Senior Convertible Notes interest expense		14,914			8,204			12,238
Miscellaneous book/tax differences, net		(12,131	)		(12,007	)		(24,838	)
Taxable income (loss) before adjustments		16,392			(90,464	)		102,460
Less: Taxable loss carried forward(B)		—			90,464			—
Taxable income subject to the 90% dividend requirement	$	16,392		$	—		$	102,460

(A) Depreciation expense from majority-owned subsidiaries and affiliates, which are consolidated for financial reporting purposes but not for tax reporting purposes, is included in the reconciliation item “Joint venture equity in earnings (loss), net.”

(B) The Company has net operating loss carryforwards expiring in 2030 of approximately $90.5 million that can offset future undistributed taxable income.

Reconciliation between cash dividends paid and the dividends paid deduction is as follows (in thousands):

	For the Year Ended December 31,
	2011			2010			2009
Dividends paid(A)	$	75,253		$	61,204		$	102,460
Less: Dividends designated to prior year		(6,967	)		(6,967	)		(6,967	)
Plus: Dividends designated from the following year		6,967			6,967			6,967
Less: Return of capital		(58,861	)		(61,204	)		—
Dividends paid deduction	$	16,392		$	—		$	102,460

(A) Dividends paid in 2009 include stock dividends distributed under IRS Revenue Procedure 2009-15.

F-55

The dividends declared in the fourth quarter with respect to the Company’s common share dividends for the years ended December 31, 2011, 2010 and 2009, have been allocated and reported to shareholders in the subsequent year. The tax characterization of common share dividends per share as reported to shareholders for the years ended December 31, 2011, 2010, and 2009, are summarized as follows:

2011 Dividends	Date Paid		Gross Ordinary Income		Capital Gain Distributions		Return of Capital		Total Dividends
4th quarter 2010		01/05/11	$	—	$	—	$	0.0200	$	0.0200
1st quarter		04/05/11		—		—		0.0400		0.0400
2nd quarter		07/06/11		—		—		0.0400		0.0400
3rd quarter		10/11/11		—		—		0.0600		0.0600
4th quarter		01/06/12		—		—		—		—
			$	—	$	—	$	0.1600	$	0.1600
2010 Dividends	Date Paid		Gross Ordinary Income		Capital Gain Distributions		Return of Capital		Total Dividends
4th quarter 2009		01/06/10	$	—	$	—	$	0.0200	$	0.0200
1st quarter		04/06/10		—		—		0.0200		0.0200
2nd quarter		07/07/10		—		—		0.0200		0.0200
3rd quarter		10/05/10		—		—		0.0200		0.0200
4th quarter		01/05/11		—		—		—		—
			$	—	$	—	$	0.0800	$	0.0800
2009 Dividends	Date Paid		Gross Ordinary Income		Capital Gain Distributions		Return of Capital		Total Dividends
1st quarter		04/21/09	$	0.2000	$	—	$	—	$	0.2000
2nd quarter		07/21/09		0.2000		—		—		0.2000
3rd quarter		10/15/09		0.0200		—		—		0.0200
4th quarter		01/06/10		—		—		—		—
			$	0.4200	$	—	$	—	$	0.4200

17.    Segment Information

The Company has three reportable operating segments: shopping centers, Brazil equity investment and other investments. Each consolidated shopping center is considered a separate operating segment and follows the accounting policies described in Note 1; however, each shopping center on a stand-alone basis represents less than 10% of the revenues, profit or loss, and assets of the combined reported operating segment and meets the majority of the aggregation criteria under the applicable standard. The following table summarizes the Company’s shopping centers and office properties, including those in Brazil:

	December 31,
	2011		2010		2009
Shopping centers owned		432		478		567
Unconsolidated joint ventures		177		189		223
Consolidated joint ventures		2		3		34
States(A)		38		39		43
Office properties		5		6		6
States		3		4		4

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

F-56

The tables below present information about the Company’s reportable operating segments reflecting the impact of discontinued operations (Note 12) (in thousands):

	For the Year Ended December 31, 2011
	Other Investments			Shopping Centers			Brazil Equity Investments		Other			Total
Total revenues	$	706		$	753,227							$	753,933
Operating expenses(A)		(360	)		(295,556	)							(295,916	)
Net operating income		346			457,671								458,017
Unallocated expenses(B)									$	(476,345	)		(476,345	)
Equity in net (loss) income of joint ventures					(6,747	)	$	20,481					13,734
Impairment of joint venture investments													(2,921	)
Loss from continuing operations												$	(7,515	)
Total gross real estate assets	$	47,722		$	8,222,384							$	8,270,106
	For the Year Ended December 31, 2010
	Other Investments			Shopping Centers			Brazil Equity Investment		Other			Total
Total revenues	$	1,132		$	745,230							$	746,362
Operating expenses(A)		(421	)		(308,243	)							(308,664	)
Net operating income		711			436,987								437,698
Unallocated expenses(B)									$	(604,456	)		(604,456	)
Equity in net (loss) income of joint ventures					(4,958	)	$	10,558					5,600
Impairment of joint venture investments													(227	)
Loss from continuing operations												$	(161,385	)
Total gross real estate assets	$	49,607		$	8,361,632							$	8,411,239

F-57

	For the Year Ended December 31, 2009
	Other Investments			Shopping Centers			Brazil  Equity Investment		Other			Total
Total revenues	$	1,285		$	737,297							$	738,582
Operating expenses(A)		(788	)		(225,528	)							(226,316	)
Net operating income		497			511,769								512,266
Unallocated expenses(B)									$	(542,486	)		(542,486	)
Equity in net (loss) income of joint ventures					(19,239	)	$	9,506					(9,733	)
Impairment of joint venture investments													(184,584	)
Loss from continuing operations												$	(224,537	)
Total gross real estate assets	$	49,637		$	8,773,300							$	8,822,937

(A) Includes impairment charges of $67.9 million, $84.8 million and $12.2 million for the years ended December 31, 2011, 2010 and 2009, respectively.

(B) Unallocated expenses consist of general and administrative expenses, interest income, interest expense, other income/expense, tax benefit/expense and depreciation and amortization as listed in the consolidated statements of operations.

18.    Subsequent Events

Financing Activity

In January 2012, the Company entered into a $250 million unsecured term loan (“Unsecured Term Loan”), which consists of a $200 million tranche that bears interest at an annual rate of LIBOR plus 210 basis points and matures on January 31, 2019, and a $50 million tranche that currently bears interest at an annual rate of LIBOR plus 170 basis points and matures on January 31, 2017. Additionally, the Company entered into interest rate swaps on the $200 million tranche to fix the interest rate at 3.64%. Borrowings on the Unsecured Term Loan bear interest at LIBOR plus a margin based upon DDR’s long-term senior unsecured debt ratings.

Investment Activity

In January 2012, affiliates of the Company and The Blackstone Group L.P. (“Blackstone”) formed a joint venture that is expected to acquire a portfolio of 46 shopping centers owned by EPN Group and managed by the Company. The transaction is valued at approximately $1.4 billion, including assumed debt of $640 million and at least $305 million of anticipated new financings. An affiliate of Blackstone will own 95% of the common equity of the joint venture, and the remaining 5% interest will be owned by an affiliate of the Company. The Company is also expected to invest $150 million in preferred equity in the venture with a fixed dividend rate of 10%, and will continue to provide leasing and property management services. In addition, the Company will have the right of first offer to acquire ten of the assets under specified conditions.

In connection with the transaction described above, in January 2012 the Company entered into forward sale agreements with respect to 18,975,000 of its common shares at a price of $12.95 per share. Subject to the Company’s right to elect cash or net share settlement, the Company expects to physically settle the forward sale agreements on or about June 29, 2012. The Company expects to use the net proceeds to fund its investment in the joint venture with an affiliate of Blackstone as described above.

Unaudited—For the period February 29, 2012 through September 30, 2012

The Blackstone transaction and the forward sale agreements described above as Investment Activity closed in June 2012.

During the period January 1, 2012 through September 30, 2012, the Company purchased seven operating assets, including its unconsolidated joint venture partner’s ownership interest in five operating assets. The aggregate purchase price of these assets was approximately $333 million. The Company recorded an aggregate Gain on Change in Control of Interest of approximately $80 million related to the difference between the Company’s carrying value and fair value of the previously held equity interest as a result of the purchase of the remaining interest in the five operating assets.

During the period January 1, 2012 through September 30, 2012, the Company sold 12.7 million common shares through its continuous equity program, generating gross proceeds of $190.0 million. The net proceeds were used to acquire shopping centers.

In August 2012, the Company issued $200.0 million of its newly designated 6.50% Class J cumulative redeemable preferred shares (the “Class J Preferred Shares”) at a price of $500.00 per share (or $25.00 per depositary share). In addition, in August 2012 the Company redeemed its 7.50% Class I cumulative redeemable preferred shares (the “Class I Preferred Shares”) at a redemption price of $500.00 per share (or $25.00 per depositary share) plus accrued and unpaid dividends of $3.75 per share (or $0.1875 per depositary share). The proceeds from the issuance of the Class J Preferred Shares were used primarily to redeem all of the Class I Preferred Shares. The Company recorded a charge of $5.8 million related to the write-off of the Class I Preferred Shares’ original issuance costs.

In June 2012, the Company issued $300 million aggregate principal amount of 4.625% senior unsecured notes due July 2022. Also in June 2012, the Company repaid all of its 5.375% senior unsecured notes at par with an aggregate principal amount of $223.5 million. These notes were scheduled to mature in October 2012.

F-58

19.    Quarterly Results of Operations (Unaudited)

The following table sets forth the quarterly results of operations, as restated for discontinued operations, for the years ended December 31, 2011 and 2010 (in thousands, except per share amounts):

	First			Second			Third			Fourth			Total
2011
Revenues	$	189,383		$	186,926		$	187,233		$	190,391		$	753,933
Net income (loss) attributable to DDR		35,312			(13,383	)		(42,989	)		5,206	(A)		(15,854	)
Net income (loss) attributable to DDR common shareholders		24,745			(26,871	)		(49,956	)		(1,761	)(A)		(53,843	)
Basic:
Net income (loss) per common share attributable to DDR common shareholders	$	0.10		$	(0.10	)	$	(0.18	)	$	(0.01	)	$	(0.20	)
Weighted-average number of shares		255,966			274,299			274,639			274,718			270,278
Diluted:
Net income (loss) per common share attributable to DDR common shareholders	$	0.01		$	(0.10	)	$	(0.18	)	$	(0.01	)	$	(0.28	)
Weighted-average number of shares		262,581			274,299			274,639			274,718			271,472
2010
Revenues	$	188,082		$	184,866		$	184,332		$	189,082		$	746,362
Net loss attributable to DDR		(24,247	)		(86,575	)		(14,310	)		(84,226	)(A)		(209,358	)
Net loss attributable to DDR common shareholders		(34,814	)		(97,143	)		(24,877	)		(94,793	)(A)		(251,627	)
Basic:
Net loss per common share attributable to DDR common shareholders	$	(0.15	)	$	(0.39	)	$	(0.10	)	$	(0.37	)	$	(1.03	)
Weighted-average number of shares		227,133			248,533			249,139			253,872			244,712
Diluted:
Net loss per common share attributable to DDR common shareholders	$	(0.15	)	$	(0.47	)(B)	$	(0.10	)	$	(0.37	)	$	(1.03	)
Weighted-average number of shares		227,133			253,539			249,139			253,872			244,712

(A) Includes impairment charges of $47.4 million and $29.1 million for the three months ended December 31, 2011 and 2010, respectively, and an adjustment to the tax valuation allowance of $58.3 million (Note 16) for the three months ended December 31, 2010. In addition, the Company recorded an aggregate gain on sale of real estate, including discontinued operations, of $54.3 million (Note 12) for the three months ended December 31, 2011.

(B) For the three-month period ended June 30, 2010, the Company’s quarterly report on Form 10-Q excluded the dilutive effect of the warrants and thus overstated diluted EPS. Management has concluded that the impact on its diluted EPS resulting from this error was not material. The revision to the amounts above for the three-month period ended June 30, 2010, decreased previously reported diluted EPS by $0.08.

F-59

20.    Other Events

Subsequent to the filing of the Company’s Annual Report on Form 10-K on February 28, 2012, the Company has retrospectively adjusted its audited consolidated financial statements for the years ended December 31, 2011, 2010 and 2009 to reflect the impact of the classification of discontinued operations of properties sold from January 1, 2012 through June 30, 2012, pursuant to the requirements of ASC 360, Property, Plant, and Equipment (“ASC 360”).

ASC 360 requires the Company to report the results of operations of a property if it has either been disposed or is classified as held for sale in discontinued operations and meets certain other criteria. Accordingly, the Company has retrospectively adjusted its audited consolidated financial statements for the properties not previously classified as discontinued operations for the years ended December 31, 2011, 2010 and 2009. These statements reflect 20 of the 21 properties sold during the six-month period ended June 30, 2012 (as one property sold in 2012 was considered held for sale and included in the presentation of discontinued operations at December 31, 2011) and one property considered held for sale at June 30, 2012 (collectively, the “DISC OP Properties”). The Company recorded impairment charges of approximately $15.2 million during the six months ended June 30, 2012, relating to the DISC OP Properties.

As a result of the foregoing, Notes 1, 2, 3, 5, 9, 11, 12, 15, 17, 18 and 19 (unaudited) to the consolidated financial statements for the years ended December 31, 2011, 2010 and 2009, have been retrospectively adjusted and the consolidated financial statements have been reissued.

F-60

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	DDR CORP.                 (Registrant)
Date: October 1, 2012		/s/ Christa A. Vesy
		Christa A. Vesy
		Executive Vice President and Chief Accounting Officer

EXHIBIT INDEX

Exhibit No.	Description
23	Consent of PricewaterhouseCoopers LLC
101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Schema Document
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document
101.LAB	XBRL Taxonomy Extension Label Linkbase Document
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document