Exhibit 99.1
D D R C O R P. STRATEGIC TRANSFORMATION NAREIT UPDATE JUNE 2018
safe harbor DDR Corp. considers portions of the information in this presentation to be forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, both as amended, with respect to the Company’s expectation for future periods. Although the Company believes that the expectations reflected in such forward-looking statements are based upon reasonable assumptions, it can give no assurance that its expectations will be achieved. For this purpose, any statements contained herein that are not historical fact may be deemed to be forward-looking statements. There are a number of important factors that could cause our results to differ materially from those indicated by such forward-looking statements, including, among other factors, our ability to complete the spin-off of Retail Value Inc. (“RVI”) in a timely manner or at all, our ability to satisfy the various closing conditions to the spin-off, the impact of the spin-off on our business and that of RVI, and the Company’s and RVI’s ability to execute their respective business strategies following the spin-off. Other risks and uncertainties that could cause our results to differ materially from those indicated by such forward-looking statements include property damage, expenses related thereto and other business and economic consequences (including the potential loss of rental revenues) resulting from extreme weather conditions in locations where we own properties, and the ability to estimate accurately the amounts thereof; sufficiency and timing of any insurance recovery payments related to damages from extreme weather conditions; local conditions such as supply of space or a reduction in demand for real estate in the area; competition from other available space; dependence on rental income from real property; the loss of, significant downsizing of or bankruptcy of a major tenant; redevelopment and construction activities may not achieve a desired return on investment; our ability to buy or sell assets on commercially reasonable terms; our ability to complete acquisitions or dispositions of assets under contract; our ability to secure equity or debt financing on commercially acceptable terms or at all; our ability to enter into definitive agreements with regard to our financing and joint venture arrangements or our failure to satisfy conditions to the completion of these arrangements; the success of our deleveraging strategy; and our ability to maintain our REIT status. 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 the Company’s most recent reports on Form 10-K and Form 10-Q. The Company undertakes no obligation to publicly revise these forward-looking statements to reflect events or circumstances that arise after the date hereof. In addition, this presentation includes certain non-GAAP financial measures. Non-GAAP financial measures should not be considered replacements for, and should be read together with, the most comparable GAAP measures. Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP measures can be found in the appendix to this presentation. ddr corp. // strat e g i c t r a n s f o r m at i o n n a r e i t u p d at e 2
TRANSACTION OVERVIEW—NEW DDR AND RVI BUSINESS PLANS TWO DISTINCT COMPANIES WITH TWO DISTINCT STRATEGIES $1.35BN MORTGAGE PROCEEDS 16 MM SF MM 28 SF EXTERNAL MANAGEMENT AGREEMENT NEW DDR RETAIL VALUE INC. (RVI) Maximize earnings, NAV, and cash flow growth Realize NAV through distribution of asset through releasing, redevelopment, and sale proceeds to investors opportunistic investment —Curated portfolio maximizes exposure to growth —Planned 2-3 year sale process with net proceeds and redevelopment assets distributed to shareholders after payment of mortgage loan and preferred dividend ($81MM sold to date) —Top tier convenience and demographics —Externally managed by DDR for maximum cost —Low-risk near-term releasing opportunities to drive efficiency NOI growth —Minimal increase to combined net G&A from —Maximize risk-adjusted returns through leverage- incremental public company costs neutral share repurchases, accretive redevelopment / densification,andacquisitionofmispricedassets—7.0x net Debt / Adjusted EBITDA at closing of mortgage— No Puerto Rico exposure loan (including business interruption insurance proceeds), lower at spin as assets sold in 1H2018— Investment grade credit rating —DDR will continue repair work and support for— Net Debt / Adjusted EBITDA ~6.0x by 2H2018 employees amid recovery efforts in Puerto Rico while exploring all alternatives DDR CORP. // STRAT E G I C T R A N S F O R M AT I O N N A R E I T U P D AT E 3
TRANSACTION OVERVIEW—SIGNIFICANT PORTFOLIO REPOSITIONING INCREASED EXPOSURE TO GROWTH AND REDEVELOPMENT ASSETS • New DDR’s portfolio specifically curated asset-by-asset to provide exposure to high-quality, high-growth assets most appropriate for the public markets • Smaller pool of remaining durable assets have top-tier convenience and demographics DDR (3Q2017) NEW DDR $108K 68 19% $111K 68 Avg. Income HH GSA Score TAP 8% REDEVELOPMENT Avg. Income HH GSA Score TAP REDEVELOPMENT PORTFOLIO COMPOSITION $86K 60 26% IMPROVED 63 Avg. HH GSA TAP POST SPIN 41% $95K Income Score GROWTH GROWTH Avg. HH GSA TAP Income Score $78K 59 66% OF NOI Avg. Income HH GSA Score TAP DURABLE 40% OF NOI $96K 65 DURABLE Avg. Income HH GSA Score TAP Note: New DDR represents percentage of 2018E consolidated adjusted NOI DDR CORP. // STRAT E G I C T R A N S F O R M AT I O N N A R E I T U P D AT E 4
TRANSACTION OVERVIEW—IMPROVED RELATIVE AND ABSOLUTE POSITIONING GREEN STREET ADVISORS TAP SCORE AVERAGE HOUSEHOLD INCOME ANNUAL BASE RENT PSF 65 $99K $17.29 66 $100K $17.60 65 +7% $98K +17% $17.40 +5% $96K $17.20 64 $17.00 $94K 63 $16.80 $92K 62 $90K $16.60 61 $16.40 $88K $16.20 60 $86K $16.00 59 $84K $15.80 58 $82K $15.60 DDR—1Q2018 NEW DDR DDR—1Q2018 NEW DDR DDR—1Q2018 NEW DDR 80 $130K $30 $28 $120K 75 $26 70 $110K $24 $100K $22 65 $20 $90K $18 60 $80K $16 $14 55 $70K $12 50 $60K $10 BRX KIM DDR NEW UE WRI RPAI ROIC REG AKR FRT BRX ROIC DDR KIM RPAI WRI NEW UE REG FRT AKR BRX DDR RPAI WRI KIM ROIC UE NEW REG FRT AKR DDR DDR DDR Source: Trade Area Systems and Green Street Advisors. Note: New DDR pro forma for completion of $900MM disposition plan. DDR CORP. // STRAT E G I C T R A N S F O R M AT I O N N A R E I T U P D AT E 5
TRANSACTION OVERVIEW—NEW DDR AND RVI OPERATING METRICS DDR NEW DDR(1) RETAIL VALUE INC. Transaction separates highest growth Continental U.S. assets from a pool of highly saleable properties currently 44 28 MM 16 SF being discounted by the public (PRO-RATA) MM SF (PRO-RATA) MM SF markets 1Q2018 Properties (Including JVs) 132 (258) 82 (208) 50 1Q2018 Pro-Rata Real Estate Gross Book Value (2) $8.6BN $5.8BN $2.8BN 1Q2018 Adjusted NOI (3) $156MM $101MM $56MM Consolidated ABR PSF (4) $16.49 $17.29 $15.32 FY 2016 / 2017 Blended Leasing Spreads 9.1% / 6.0% 12.5% / 8.4% 3.9% / 2.6% Consolidated Leased Rate (4) 92.9% 93.7% 91.7% Consolidated Green Street Advisors TAP Score (5) 61 65 53 Consolidated Avg. HH Income (3-Mile) $84,294 $98,675 $61,378 Consolidated Population (3-Mile) 99,476 110,007 80,814 (1) New DDR operating metrics (ABR PSF, leasing spreads, leased rate) and demographics pro forma for completion of $900MM disposition plan (2) Includes DDR’s pro-rata share of JV Real Estate Gross Book Value ($610MM) (3) Includes DDR share of JV NOI. Excludes lease termination fees, NOI from assets sold in 1Q2018, and net hurricane-related losses. See calculation, definition and reconciliation in Appendix for non-GAAP financial measures. Numbers may not add due to rounding (4) As of 1Q2018 (5) Continental U.S. only. GSA TAP scores unavailable for Puerto Rico DDR CORP. // STRAT E G I C T R A N S F O R M AT I O N N A R E I T U P D AT E 6
TRANSACTION OVERVIEW—RVI UPDATE AND ESTIMATED TIMELINE RVI SPIN REMAINS ON TRACK FOR 3Q EFFECTIVE DATE • RVI asset Silver Spring Square (Mechanicsburg, PA) sold on April 17, 2018 for $81MM. Proceeds were used to repay RVI mortgage debt • Expected RVI Board of Directors: —Scott Roulston (former DDR director), Barry Sholem (former DDR director), Gary Boston (new independent director), Henrie Koetter (new independent director), David Lukes (management) and Matt Ostrower (management) • DDR expects to hold a $190MM preferred investment in RVI (1) —No coupon, no maturity —Preference: All dividends excluding payment of 100% of taxable net income to common shareholders Closing secured of $ by 1.35BN 50 RVI mortgage assets Public Form 10 Filing & SEC Review Announcement and Mortgage unsecured debt debt repayment tender Expected Spin Completion DEC JAN FEB MAR APR MAY JUN JUL Commence disposition RVI process Expected completion of previously announced $900MM disposition plan (1) Classified as mezzanine equity by RVI. Ability to receive an additional $10MM for a total of $200MM in maximum dividends in the event certain asset sale thresholds are met. DDR CORP. // STRAT E G I C T R A N S F O R M AT I O N N A R E I T U P D AT E 7
NEW DDR OVERVIEW
NEW DDR—SIGNIFICANT PORTFOLIO REPOSITIONING INCREASED EXPOSURE TO GROWTH AND REDEVELOPMENT ASSETS New DDR’s portfolio specifically curated asset-by-asset to provide exposure to high-quality, high-growth assets most appropriate for the public markets Smaller pool of remaining durable assets have top-tier convenience and demographics DDR (3Q2017) NEW DDR $108K 68 19% $111K 68 Avg. Income HH GSA Score TAP 8% REDEVELOPMENT Avg. Income HH GSA Score TAP REDEVELOPMENT PORTFOLIO COMPOSITION $86K 60 26% IMPROVED Avg. HH GSA TAP POST SPIN 41% $95K 63 Income Score GROWTH GROWTH Avg. HH GSA TAP Income Score $78K 59 66% OF NOI Avg. Income HH GSA Score TAP DURABLE 40% OF NOI $96K 65 DURABLE Avg. Income HH GSA Score TAP Note: New DDR represents percentage of 2018E consolidated adjusted NOI DDR CORP. // STRAT E G I C T R A N S F O R M AT I O N N A R E I T U P D AT E 9
NEW DDR—PORTFOLIO DIVERSITY NEW DDR’S FOCUSED PORTFOLIO OF 79 WHOLLY-OWNED PROPERTIES PROVIDES EXPOSURE TO HIGH-QUALITY, GROWTH ASSETS Traffic driving discounters and grocers anchor the majority of New DDR centers Assets with traditional/specialty grocers account for 43% of New DDR’s portfolio with average reported sales of $628/ft Including mass merchants with a grocery component, almost 70% of New DDR’s portfolio is anchored by a food component VALUE / DISCOUNT TILT ASSETS WITH SIGNIFICANT SHOP TO ANCHOR BALANCE GROCERY COMPONENT 27% 32% 18% MAJOR OF ABR DISCOUNT WITH NO NO COMPONENT GROCERY SPECIALTY 22% 66% GROCER COMPONENT SHOP BY GLA ANCHOR BY ABR 25% 34% TRADITIONAL GROCER SHOP BY ABR 73% 25% 78% QUALITY OF ABR ANCHORED DISCOUNTERS BY MASS MERCHANT ANCHOR BY GLA High quality discounters, including Ross, T.J. Maxx Over two thirds of New DDR is anchored by New DDR’s centers derive 34% of ABR from brands, and Burlington anchor wholly-owned traditional grocers, specialty grocers or mass in-line tenants even though only 22% of centers comprising 73% of New DDR’s ABR merchants with a grocery component including space is leased to shop tenants Walmart, Target and Costco Note: Property count as of May 31, 2018 DDR CORP. // STRAT E G I C T R A N S F O R M AT I O N N A R E I T U P D AT E 10
NEW DDR—PORTFOLIO MAP TOP 12 MARKETS ACCOUNT FOR 70% OF CONSOLIDATED ADJUSTED 2018E NOI Boston, MA 6% Chicago, IL 7% Columbus, OH 6% New York, NY 8% Denver, CO 6% Washington, DC 3% Charlotte, NC 6% Los Angeles, CA 4% Phoenix, AZ 7% Atlanta, GA 8% Orlando, FL 5% Miami, FL 5% MSA % of Consolidated Adjusted NOI Consolidated New DDR Assets Note: Pro forma for completion of $900MM disposition plan DDR CORP. // STRAT E G I C T R A N S F O R M AT I O N N A R E I T U P D AT E 11
NEW DDR—SUBSTANTIALLY IMPROVED OPERATING METRICS DDR NEW DDR(1) MM 44 SF MM 28 SF (PRO-RATA) (PRO-RATA) 1Q2018 Properties (Including JVs) 132 (258) 82 (208) 1Q2018 Pro-Rata Real Estate Gross Book Value (2) $8.6BN $5.8BN 1Q2018 Adjusted NOI (3) $156MM $101MM Consolidated ABR PSF (4) $16.49 $17.29 FY 2016 / 2017 Blended Leasing Spreads 9.1% / 6.0% 12.5% / 8.4% Consolidated Leased Rate (4) 92.9% 93.7% Consolidated Green Street Advisors TAP Score 61 65 Consolidated Avg. HH Income (3-Mile) $84,294 $98,675 Consolidated Population (3-Mile) 99,476 110,007 (1) New DDR operating metrics (ABR PSF, leasing spreads, SSNOI, leased rate) and demographics pro forma for completion of $900MM disposition plan (2) Includes DDR’s pro-rata share of JV Real Estate Gross Book Value ($610MM) (3) Includes DDR share of JV NOI. Excludes lease termination fees, NOI from assets sold in 1Q2018, and net hurricane-related losses. See calculation, definition and reconciliation in Appendix for non-GAAP financial measures (4) As of 1Q2018 DDR CORP. // STRAT E G I C T R A N S F O R M AT I O N N A R E I T U P D AT E 12
NEW DDR—KMART SHOPPING CENTER (BRANDON, FL) $27.8MM redevelopment of the former Kmart box in Brandon, Florida. The project is expected to stabilize in 3Q2019 at a 9% return. New DDR has no direct exposure to Sears/Kmart. DDR CORP. // STRAT E G I C T R A N S F O R M AT I O N N A R E I T U P D AT E 13
NEW DDR—NASSAU PARK PAVILION (PRINCETON, NJ) $5.4MM relocation of 18k SF of vacant small-shop space adjacent to a former Sam’s Club to the area immediately in front of a highly productive Wegman’s. The project is expected to stabilize at a 13% return. DDR CORP. // STRAT E G I C T R A N S F O R M AT I O N N A R E I T U P D AT E 14
NEW DDR—FURTHER BALANCE SHEET IMPROVEMENTS $1000 Transaction Expected to Result in a $900 Stronger DDR Balance Sheet $800 Net Debt / Adjusted EBITDA (excluding preferred $700 stock) of ~6.0x in 2H2018 $600 Weighted average maturity of 10.7 years $500 including preferred stock (6.3 years excluding) $400 No unsecured maturities until 2022 $300 Expected to have full availability under the $200 company’s $1.0BN Line of Credit at YE2018 $100 Capacity to fund 6 years of maturities $0 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 Note: As of 1Q2018 pro forma for the RVI spin and $900MM disposition program. Note: Preliminary estimate subject to change LEVERAGE / PUBLIC BOND COVENANTS DDR 1Q2018E NEW DDR 4Q2018E Commitment to Investment-Grade Credit Rating Pro-Rata Net Debt / Adjusted EBITDA 6.5x ~6.0x Larger and higher quality unencumbered pool Total Debt to RE Assets 45% ~40% with no Puerto Rico exposure Minimal consolidated secured debt Secured Debt to Assets Ratio 17% ~3% Improvement to all public bond covenants Unencumbered Assets to Unsecured Debt 213% ~240% RVI mortgage does not impact DDR covenant compliance Fixed Charge Coverage (Ex. Prepayment Penalties) 3.0x ~3.0x DDR CORP. // STRAT E G I C T R A N S F O R M AT I O N N A R E I T U P D AT E 15
NEW DDR—MINIMAL NEAR-TERM REFINANCING RISK WEIGHTED AVERAGE MATURITY NOW ABOVE PEER-GROUP AVERAGE WITH NO MATERIAL MATURITIES UNTIL 2022 % DEBT MATURING 2018—2020 WA INTEREST WEIGHTED AVERAGE DEBT MATURITY RATE BRX BRX 4.2% RPAI AKR 4.1% ADR REG 5.0% AAT WRI 4.4% WRI RPAI 3.7% FRT ROIC 3.1% KIM NEW DDR 5.8% UE NEW DDR 3.9% REG UE 4.4% KIM ROIC 3.9% FRT 0 10% 20% 30% 0 2 4 6 8 10 12 2018 2019 2020 Source: Company details. DDR data as of 1Q2018 and pro forma for the RVI spin and $900MM disposition Source: Green Street Advisors. DDR data as of 1Q2018 and pro forma for the RVI spin and program. Peer data as of 1Q2018. $900MM disposition program. Peer data as of 1Q2018. DDR CORP. // STRAT E G I C T R A N S F O R M AT I O N N A R E I T U P D AT E 16
NEW DDR—ATTRACTIVE DIVIDEND YIELD, SECTOR LEADING PAYOUT RATIO NEW DDR QUARTERLY DIVIDEND RATE EXPECTED TO BE AT LEAST $0.20/SH Enhanced cash retention for redevelopment and opportunistic investments Reset payout ratio expected to be among the most conservative in the peer group, positioned for growth Using the current share price, unadjusted for the spin of RVI, and the reset dividend rate, DDR offers an attractive dividend yield relative to the peer group 140% 8% 120% 7% 6% 100% RATIO 5% 80% YIELD PAYOUT 4% 60% AFFO 3% DIVIDEND 2018 40% 2% 20% 1% 0% 0% NEW REG BRX RPAI FRT WRI UE ROIC AKR KIM DDR 2018 AFFO PAYOUT RATIO (%) DIVIDEND YIELD (%) Source: Green Street Advisors. Price as of May 25, 2018. New DDR represents targeted payout ratio. DDR CORP. // STRAT E G I C T R A N S F O R M AT I O N N A R E I T U P D AT E 17
NEW DDR – REPAYMENT OF BLACKSTONE PREFERRED EQUITY INVESTMENT $450 $400 $350 $300 $250 DDR has received $112MM of $200 PREFERRED EQUITY preferred equity repayments since $150 (NET OF VALUATION ALLOWANCE) formation including $10MM in 2Q2018 $100 PREFERRED EQUITY REPAYMENT $237MM of preferred equity in BRE $50 $0 DDR Retail Holdings III and IV was 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 outstanding as of end of 1Q2018 68 68 66 62 61 60 51 46 41 BLACKSTONE JV PROPERTY COUNT $9 $8 $7 $6 BLACKSTONE JV INTEREST INCOME $5 $4 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 INTEREST INCOME Note: Income from DDR’s preferred equity investment is included in Interest Income on the consolidated income statement. Dollars in millions except property count. DDR CORP. // STRAT E G I C T R A N S F O R M AT I O N N A R E I T U P D AT E 18
NEW DDR—2018 GUIDANCE & FFO BRIDGE (SPLIT-ADJUSTED) NO CHANGE TO SPLIT-ADJUSTED OPERATING FFO PER SHARE GUIDANCE AND RELATED ASSUMPTIONS 2Q2018 OFFO guidance per share (basic and diluted) of at least $0.45 per share 3Q2018 OFFO guidance per share (basic and diluted) of at least $0.30 per share $0.70 $0.07 $0.02 $0.01 $0.30 $0.60 $0.11 $0.53 $0.02 $0.02 $0.50 $0.02 $0.02 $0.45 $0.40 $0.30 $0.30 $0.20 $0.10 $0.00 1Q18 JV FEE & DDR PRO-RATA G&A & 2Q18E PRO-RATA RVI FEE (1) DDR JV FEE & RVI 3Q18E OFFO INTEREST DISPOSITION INTEREST OTHER OFFO INTEREST INCOME DISPOSITION INTEREST INCOME OFFO INCOME PROGRAM EXPENSE EXPENSE PROGRAM INCOME Note: The company has no intention to provide quarterly FFO guidance going forward. Numbers may not add due to rounding. (1) Assumes no unannounced RVI dispositions, a 3Q2018 effective date and 1:2 reverse stock split DDR CORP. // STRAT E G I C T R A N S F O R M AT I O N N A R E I T U P D AT E 19
NEW DDR—COMPONENTS OF NAV New DDR Assets (1) New DDR Liabilities & Preferred Stock (1) 1Q2018 Adjusted NOI (2) $101 Construction in Progress and Land $68 Land Adjacent to Existing Centers $31 Consolidated Debt (5) $2,426 Cost Basis of HQ Building $41 Pro-Rata Share of JV Debt (5) $335 Total Land and Development $140 Total Debt $2,761 Cash and Cash Equivalents (3) $18 Notes Receivable $20 Preferred Equity Interests, Net $237 RVI Preferred $190 Preferred Stock $525 Total Cash and Investments $465 Total Preferred Stock $525 Receivables (4) $72 Dividends Payable $79 Other Assets, Net $28 Other Liabilities (6) $149 Total Other $100 Total Other $228 (1) All figures other than $40MM receivable from RVI and RVI Preferred as of 1Q2018. Dollars in millions. (2) Includes DDR share of JV NOI. Excludes lease termination fees and NOI from assets sold in 1Q2018. See calculation, definition and reconciliation in Appendix for non-GAAP financial measures (3) Includes restricted cash (4) Excludes straight-line rents receivable, net. Includes $40MM RVI receivable (5) Excludes RVI mortgage, loan costs and fair market value adjustments (6) Excludes below-market leases, net DDR CORP. // STRAT E G I C T R A N S F O R M AT I O N N A R E I T U P D AT E 20
RETAIL VALUE INC. OVERVIEW
RETAIL VALUE INC.—OPERATING METRICS VALUE RETAIL INC. CONTINENTAL ASSETS U.S. PUERTO ASSETS RICO 16 4 MM 4 SF MM SF 12 MM SF 12 1Q2018 Properties (1) 50 38 12 1Q2018 Pro-Rata Real Estate Gross Book Value $2.8BN $1.8BN $1.0BN 1Q2018 Adjusted NOI (2) $56MM $36MM $20MM Consolidated ABR PSF (3) $15.32 $13.63 $20.89 FY 2016 / 2017 Blended Leasing Spreads 3.9% / 2.6% 9.8% / 6.1% -7.0% / -12.6% Consolidated Leased Rate (3) 91.7% 93.4% 87.0% Consolidated Green Street Advisors TAP Score (4) 53 53 NA Consolidated Avg. HH Income (3-Mile) $61,378 $75,943 $32,609 Consolidated Population (3-Mile) 80,814 64,147 113,733 (1) Includes Silver Spring Square (Sold April 17, 2018) (2) Excludes lease termination fees and net hurricane-related losses. See calculation, definition and reconciliation in Appendix for non-GAAP financial measures (3) As of 1Q2018 (4) Continental U.S. only. GSA TAP scores unavailable for Puerto Rico DDR CORP. // STRAT E G I C T R A N S F O R M AT I O N N A R E I T U P D AT E 22
RETAIL VALUE INC.—SELECT ASSET OVERVIEW HIGHER QUALITY AND MORE LIQUID PORTFOLIO THAN ASSETS SOLD TO DATE BEAVER CREEK SEABROOK GRESHAM SILVER SPRING MARKETPLACE CROSSINGS COMMONS STATION SQUARE AT TOWNE CENTRE RALEIGH BOSTON PORTLAND HARRISBURG DALLAS MSA MSA MSA MSA MSA 321K 175K 342K 343K 180K Owned GLA Owned GLA Owned GLA Owned GLA Owned GLA 72 53 53 55 52 Green Street TAP Score Green Street TAP Score Green Street TAP Score Green Street TAP Score Green Street TAP Score $16.09 $18.58 $19.76 $17.88 $17.05 Rent PSF Rent PSF Rent PSF Rent PSF Rent PSF DDR CORP. // STRAT E G I C T R A N S F O R M AT I O N N A R E I T U P D AT E 23
RETAIL VALUE INC.—PUERTO RICO OPERATIONS UPDATE PUERTO RICO FUNDAMENTALS STABILIZING PR Portfolio 87% leased as of 1Q2018 TOTAL PUERTO RICO QUARTERLY CASH RECEIPTS(1) vs. 91% prior to storm $40.0 Remaining openings generally dependent on repairs to damage $35.0 Repairs expected to be substantially complete at all $30.0 12 properties, including Palma Real, by end of 3Q19 $25.0 Estimated Aggregate casualty (MILLIONS) $20.0 insurance claim of $150MM $15.0 Includes the cost to clean up, repair and rebuild $10.0 (excludes costs related to self-insured tenants) Approximately 20% of the estimate is related to $5.0 Palma Real restoration costs $0.0 DDR carries property, casualty, and business 1Q17 2Q17 3Q17 4Q17 1Q18 interruption insurance with limits of $330MM (1) Excludes business interruption insurance payments DDR CORP. // STRAT E G I C T R A N S F O R M AT I O N N A R E I T U P D AT E 24
RETAIL VALUE INC.—PORTFOLIO MAP GEOGRAPHICALLY DIVERSE AND FINANCEABLE POOL OF ASSETS RVI Assets DDR CORP. // STRAT E G I C T R A N S F O R M AT I O N N A R E I T U P D AT E 25
RETAIL VALUE INC.—FINANCING DETAILS PROCEEDS • $1.35BN mortgage financing • Transaction demonstrates financing availability and quality of RVI asset pool:—Cross-collateralized CHARACTERISTICS—Rate: L + 315bp (LIBOR subject to a 3.0% cap)—Term: 5-years fully extended • RVI disposition proceeds used to repay mortgage debt and preferred ADDITIONAL dividends with excess proceeds distributed to shareholders subject DETAILS to loan compliance • See the Form 10 Information Statement filed by Retail Value Inc. with the Securities and Exchange Commission for further information DDR CORP. // STRAT E G I C T R A N S F O R M AT I O N N A R E I T U P D AT E 26
RETAIL VALUE INC. - COMPONENTS OF NAV RVI Assets (1) RVI Liabilities & Preferred Stock (1) 1Q2018 Adjusted NOI (2) $56 Construction in Progress and Land $9 Consolidated Debt (5) $1,350 Land Adjacent to Existing Centers $0 Pro-Rata Share of JV Debt $0 Total Land and Development $9 Total Debt $1,350 Cash and Cash Equivalents (3) $48 DDR Mezzanine Equity (Preferred Stock) $190 Total Cash and Investments $48 Total Preferred Stock $190 Receivables (4) $76 Dividends Payable $0 Other Assets, Net $20 Other Liabilities (6) $85 Total Other $96 Total Other $85 (1) All figures other than $40MM payable to DDR and DDR Preferred as of 1Q2018. Dollars in millions. (2) Excludes lease termination fees and net hurricane-related losses. See calculation, definition and reconciliation in Appendix for non-GAAP financial measures (3) Includes restricted cash (4) Excludes straight-line rents receivable, net. Includes Casualty insurance receivable. (5) Excludes loan costs (6) Excludes below-market leases, net. Includes $40MM payable to DDR DDR CORP. // STRAT E G I C T R A N S F O R M AT I O N N A R E I T U P D AT E 27
APPENDIX
RETAIL VALUE INC. PROPERTY LIST (GLA in thousands, as of 1Q2018) CONTINENTAL U.S. 100% DDR OWNERSHIP # Center MSA Location ST Owned GLA Total GLA ABR PSF Key Tenants 1 Palm Valley Pavilions West Phoenix Goodyear AZ 233 277 $18.16 Barnes & Noble, Best Buy, Ross Dress for Less, Total Wine & More 2 Tucson Spectrum Tucson Tucson AZ 717 970 $14.61 Bed Bath & Beyond, Best Buy, Food City, Harkins Theatres, Home Depot (U), JCPenney, LA Fitness, Marshalls, Michaels, OfficeMax, Old Navy, Party City, PetSmart, Ross Dress for Less, Target (U) 3 Brandon Boulevard Shoppes Tampa Valrico FL 86 89 $15.50 LA Fitness 4 Homestead Pavilion Miami Homestead FL 300 391 $18.49 Bed Bath & Beyond, Kohl’s (U), Michaels, Ross Dress for Less 5 International Drive Value Center Orlando Orlando FL 186 192 $10.42 Bed Bath & Beyond, dd’s Discounts, Ross Dress for Less, T.J. Maxx 6 Lake Walden Square Tampa Plant City FL 245 245 $11.97 Marshalls, Premiere Cinemas, Ross Dress for Less, Winn Dixie 7 Mariner Square Tampa Spring Hill FL 194 519 $9.60 Bealls, Ross Dress for Less, Sam’s Club (U), Walmart (U) 8 Millenia Plaza Orlando Orlando FL 412 412 $10.82 BJ’s Wholesale Club, Dick’s Sporting Goods, Home Depot, Ross Dress for Less, Total Wine & More, Toys “R” Us/Babies “R” Us 9 Tequesta Shoppes Miami Tequesta FL 110 110 $11.65 Marshalls 10 The Walk at Highwoods Preserve Tampa Tampa FL 138 232 $15.95 Best Buy, HomeGoods, Michaels, Muvico (U) 11 Douglasville Pavilion Atlanta Douglasville GA 266 369 $12.19 Big Lots, Marshalls, Michaels, OfficeMax, PetSmart, Ross Dress for Less, Target (U) 12 Newnan Crossing Atlanta Newnan GA 223 453 $8.37 Hobby Lobby, Lowe’s, Walmart (U) 13 East Lloyd Commons Evansville Evansville IN 160 160 $13.86 Best Buy, Michaels, Dick’s Sporting Goods 14 Grandville Marketplace Grand Rapids Grandville MI 224 372 $10.84 Hobby Lobby, Lowe’s (U), OfficeMax 15 Green Ridge Square Grand Rapids Grand Rapids MI 216 407 $13.50 Bed Bath & Beyond, Best Buy, Michaels, T.J. Maxx, Target (U), Toys “R” Us (U) 16 Maple Grove Crossing Minneapolis Maple Grove MN 262 350 $13.35 Barnes & Noble, Bed Bath & Beyond, Cub Foods (U), Kohl’s, Michaels 17 Midway Marketplace Minneapolis St. Paul MN 324 487 $8.65 Cub Foods, Herberger’s (U), LA Fitness, T.J. Maxx, Walmart 18 Riverdale Village Minneapolis Coon Rapids MN 788 968 $15.52 Bed Bath & Beyond, Best Buy, Costco (U), Dick’s Sporting Goods, DSW, JCPenney, Jo-Ann, Kohl’s, Old Navy, T.J. Maxx 19 Big Oaks Crossing Tupelo Tupelo MS 348 348 $6.13 Jo-Ann, Sam’s Club, Walmart 20 Crossroads Center Gulfport Gulfport MS 555 591 $11.62 Academy Sports, Barnes & Noble, Belk, Burke’s Outlet, Cinemark, Forever 21, Michaels, Ross Dress for Less, T.J. Maxx 21 Seabrook Commons Boston Seabrook NH 175 393 $18.58 Dick’s Sporting Goods, Walmart (U) 22 Hamilton Commons Atlantic City Mays Landing NJ 397 397 $16.73 Bed Bath & Beyond, Marshalls, Regal Cinemas, Ross Dress for Less, Hobby Lobby 23 Wrangleboro Consumer Square Atlantic City Mays Landing NJ 842 842 $13.41 Babies “R” Us, Best Buy, BJ’s Wholesale Club, Books-A-Million, Christmas Tree Shops, Dick’s Sporting Goods, Just Cabinets, Kohl’s, Michaels, PetSmart, Staples, Target 24 Beaver Creek Crossings Raleigh Apex NC 321 321 $16.09 Burke’s Outlet, Dick’s Sporting Goods, Regal Beaver Creek 12, T.J. Maxx CONTINUED TO NEXT PAGE >>> DDR CORP. // STRAT E G I C T R A N S F O R M AT I O N N A R E I T U P D AT E 29
RETAIL VALUE INC. PROPERTY LIST (CONTINUED) (GLA in thousands, as of 1Q2018) CONTINENTAL U.S. 100% DDR OWNERSHIP # Center MSA Location ST Owned GLA Total GLA ABR PSF Key Tenants 25 Great Northern Plazas Cleveland North Olmsted OH 631 669 $13.83 Bed Bath & Beyond, Best Buy, Big Lots, Burlington, DSW, Home Depot, Jo-Ann, K&G Fashion Superstore, Marc’s, PetSmart 26 Uptown Solon Cleveland Solon OH 182 182 $15.16 Bed Bath & Beyond, Mustard Seed Market & Cafe 27 Gresham Station Portland Gresham OR 342 342 $19.76 Bed Bath & Beyond, Best Buy, Craft Warehouse, LA Fitness 28 Noble Town Center Philadelphia Jenkintown PA 168 168 $15.97 AFC Fitness, Bed Bath & Beyond, PetSmart, Ross Dress for Less, Stein Mart 29 Peach Street Marketplace Erie Erie PA 721 1,001 $10.18 Babies “R” Us, Bed Bath & Beyond, Best Buy (U), Burlington, Cinemark, Erie Sports, Hobby Lobby, Home Depot (U), Kohl’s, Lowe’s, Marshalls, PetSmart, Target (U) 30 Silver Spring Square (1) Harrisburg Mechanicsburg PA 343 569 $17.88 Bed Bath & Beyond, Best Buy, Kohl’s (U), Ross Dress for Less, Target (U), Wegmans 31 Harbison Court Columbia Columbia SC 242 301 $14.84 Babies “R” Us (U), Marshalls, Nordstrom Rack, Ross Dress for Less 32 Lowe’s Home Improvement Nashville Hendersonville TN 129 144 $8.83 Lowe’s 33 Kyle Crossing Austin Kyle TX 121 375 $19.32 Kohl’s (U), Ross Dress for Less, Target (U) 34 The Marketplace at Towne Centre Dallas-FTW Mesquite TX 180 404 $17.05 Cavender’s (U), Home Depot (U), Kohl’s (U), PetSmart, Ross Dress for Less 35 Willowbrook Plaza Houston Houston TX 385 393 $15.48 AMC Theatres, Bed Bath & Beyond, Bel Furniture, buybuy BABY, Cost Plus World Market 36 Marketplace of Brown Deer Milwaukee Brown Deer WI 410 410 $9.45 Bob’s Discount Furniture, Burlington, Michaels, OfficeMax, Pick ‘n Save, Ross Dress for Less, T.J. Maxx 37 Shoppers World of Brookfield Milwaukee Brookfield WI 203 278 $11.64 Burlington, Pick ‘n Save (U), Ross Dress for Less, Xperience Fitness 38 West Allis Center Milwaukee West Allis WI 264 392 $6.79 Kohl’s, Marshalls/HomeGoods, Menards (U), Pick ‘n Save PUERTO RICO 100% DDR OWNERSHIP 1 Plaza Cayey San Juan Cayey PR 313 339 $8.98 Caribbean Cinemas (U), Walmart 2 Plaza del Atlántico San Juan Arecibo PR 223 223 $12.26 Capri, Kmart 3 Plaza del Norte San Juan Hatillo PR 682 699 $22.54 Caribbean Cinemas, JCPenney, OfficeMax, Rooms To Go, Sears, T.J. Maxx 4 Plaza del Sol San Juan Bayamón PR 601 713 $30.97 Bed Bath & Beyond, Caribbean Cinemas, H & M, Home Depot (U), Old Navy, Walmart, Dave & Buster’s 5 Plaza Escorial San Juan Carolina PR 524 636 $16.24 Caribbean Cinemas, Home Depot (U), OfficeMax, Old Navy, Sam’s Club, Walmart 6 Plaza Fajardo Fajardo Fajardo PR 274 274 $16.62 Econo, Walmart 7 Plaza Isabela Aguadilla-Isabella Isabela PR 259 259 $14.91 Selectos Supermarket, Walmart 8 Plaza Palma Real San Juan Humacao PR 449 449 $15.08 Capri, Marshalls, Pep Boys, Walmart 9 Plaza Río Hondo San Juan Bayamón PR 555 555 $25.57 Best Buy, Caribbean Cinemas, Kmart, Marshalls Mega Store, Pueblo, T.J. Maxx 10 Plaza Vega Baja San Juan Vega Baja PR 185 185 $11.84 Econo 11 Plaza Walmart Guayama Guayama PR 164 164 $9.27 Walmart 12 Señorial Plaza San Juan Río Piedras PR 202 202 $17.90 Pueblo (1) Sold April 17, 2018 DDR CORP. // STRAT E G I C T R A N S F O R M AT I O N N A R E I T U P D AT E 30
NON-GAAP FINANCIAL MEASURES—DEFINITIONS FFO is a supplemental non-GAAP financial measure used as a standard in the real estate industry and is a widely accepted measure of real estate investment trust (“REIT”) performance. Management believes that both FFO and Operating FFO provide additional indicators of the financial performance of a REIT. The Company also believes that FFO and Operating FFO more appropriately measure the core operations of the Company and provide benchmarks to its peer group. 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 and related investments, which are presented net of taxes, (iii) impairment charges on depreciable real estate property and related investments and (iv) 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 joint ventures and non-controlling interests, determined on a consistent basis. The Company’s calculation of FFO is consistent with the NAREIT definition. The Company calculates Operating FFO by excluding certain non-operating charges and gains. Operating FFO is useful to investors as the Company removes non-comparable charges and gains to analyze the results of its operations and assess performance of the core operating real estate portfolio. Other real estate companies may calculate FFO and Operating FFO in a different manner. The Company also uses Net Operating Income (“NOI”), a non-GAAP financial measure, as a supplemental performance measure. NOI is calculated herein as property revenues less property expenses and excludes all non-property and corporate level revenue and expenses. The Company believes NOI provides useful information to investors regarding the Company’s financial condition and results of operations because it reflects only those income and expense items that are incurred at the property level and, when compared across periods, reflects the impact on operations from trends in occupancy rates, rental rates, operating costs and acquisition and disposition activity on an unleveraged basis. The Company has further adjusted NOI to exclude lease termination fees, net hurricane-related losses and NOI associated with all properties sold during the first quarter ended March 31, 2018 (“Adjusted NOI”). The Company believes that FFO, OFFO and Adjusted NOI are not, and are not intended to be, presentations in accordance with GAAP. FFO, OFFO and Adjusted NOI information have their limitations as they exclude any capital expenditures associated with the re-leasing of tenant space or as needed to operate the assets. FFO, OFFO and Adjusted NOI do not represent amounts available for dividends, capital replacement or expansion, debt service obligations or other commitments and uncertainties. Management does not use FFO, OFFO and Adjusted NOI as indicators of the Company’s cash obligations and funding requirements for future commitments, acquisitions or development activities. FFO, OFFO and Adjusted NOI do not represent cash generated from operating activities in accordance with GAAP, and are not necessarily indicative of cash available to fund cash needs. FFO, OFFO and Adjusted NOI should not be considered as alternatives to net income (computed in accordance with GAAP), as indicators of operating performance or as alternatives to cash flow as a measure of liquidity. Reconciliations of these measures to the most directly comparable GAAP measure of net income (loss) has been provided herein. DDR CORP. // STRAT E G I C T R A N S F O R M AT I O N N A R E I T U P D AT E 31
NON-GAAP RECONCILIATION—ADJUSTED NOI Reconciliation of Net Income Attributable to DDR to Adjusted Net Operating Income (Adjusted NOI) At (Non-GAAP) DDR Share 1Q2018 1Q2018 GAAP RECONCILIATION Net (loss) attributable to DDR ($54,153) ($54,153) Fee income (8,111) (8,111) Interest income (5,341) (5,341) Interest expense 44,040 44,040 Depreciation and amortization 74,424 74,424 General and administrative 16,115 16,115 Other expense, net 61,607 61,607 Impairment charges 30,444 30,444 Hurricane casualty loss 750 750 Equity in net loss of joint ventures (8,786) (8,786) Reserve of preferred equity interests 3,961 3,961 Tax benefit (18) (18) Gain on disposition of real estate, net (10,011) (10,011) Income from non-controlling interests 256 256 Consolidated NOI 145,177 145,177 DDR’s consolidated JV 0 (398) Consolidated NOI, net of non-controlling interests 145,177 144,779 CONTINUED TO NEXT PAGE >>> DDR CORP. // STRAT E G I C T R A N S F O R M AT I O N N A R E I T U P D AT E 32
NON-GAAP RECONCILIATION—ADJUSTED NOI (CONTINUED) At (Non-GAAP) DDR Share 1Q2018 1Q2018 GAAP RECONCILIATION Net income from unconsolidated joint ventures 23,405 8,452 Interest expense 24,243 3,749 Depreciation and amortization 39,677 5,181 Impairment charges 16,910 846 Hurricane casualty Loss 19 1 Preferred share expense 6,508 325 Other expense, net 7,421 1,289 Gain on disposition of real estate, net (38,020) (7,448) Unconsolidated NOI 80,163 12,395 Total Consolidated + Unconsolidated NOI 225,340 157,174 Add: Hurricane casualty loss, net 1,784 1,784 Less: Lease termination fees (1,648) (808) Less: NOI impact of properties sold during 1Q2018 (3,524) (1,668) DDR—Total Consolidated + Unconsolidated Adjusted NOI $221,952 $156,482 New DDR including disposition pipeline 166,323 100,853 Retail Value Inc. 55,629 55,629 DDR—Total Consolidated + Unconsolidated Adjusted NOI $221,952 $156,482 DDR CORP. // STRAT E G I C T R A N S F O R M AT I O N N A R E I T U P D AT E 33
NON-GAAP RECONCILIATION—OFFO Reconciliation of Net Income Attributable to Common Shareholders to FFO and Operating FFO estimate Per Share—Diluted 2Q2018E 3Q2018E Net (loss) income attributable to Common Shareholders ($0.19)—($0.16) $0.04—$0.06 Depreciation and amortization of real estate 0.38—0.41 0.23—0.26 Equity in net income of JVs (0.02) (0.02) JVs’ FFO 0.04 0.04 FFO (NAREIT) $0.24 $0.29 Transaction and debt extinguishment costs 0.21—0.24 0.01 Operating FFO $0.45 $0.30 DDR CORP. // STRAT E G I C T R A N S F O R M AT I O N N A R E I T U P D AT E 34