2.	Investments in and Advances to Joint Ventures

The Company’s equity method joint ventures, which are included in Investments in and Advances to Joint Ventures in the Company’s consolidated balance sheet at December 31, 2016, are as follows:

Unconsolidated Real Estate Ventures	Effective Ownership Percentage		Assets Owned
BRE DDR Retail Holdings III		5%	50 shopping centers in several states
BRE DDR Retail Holdings IV	5		6 shopping centers in several states
DDRTC Core Retail Fund, LLC	15		25 shopping centers in several states
DDR Domestic Retail Fund I	20		55 shopping centers in several states
DDR – SAU Retail Fund, LLC	20		12 shopping centers in several states
Other Joint Venture Interests	26–79		3 shopping centers in 2 states

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

	December 31,
	2016			2015
Condensed Combined Balance Sheets
Land	$	1,287,675		$	1,343,889
Buildings		3,376,720			3,551,227
Fixtures and tenant improvements		203,824			191,581
		4,868,219			5,086,697
Less: Accumulated depreciation		(884,356	)		(817,235	)
		3,983,863			4,269,462
Construction in progress and land		56,983			52,390
Real estate, net		4,040,846			4,321,852
Cash and restricted cash		50,378			58,916
Receivables, net		50,685			52,768
Other assets, net		248,664			318,546
	$	4,390,573		$	4,752,082

Mortgage debt	$	3,034,399		$	3,177,603
Notes and accrued interest payable to the Company		1,584			1,556
Other liabilities		206,949			219,799
		3,242,932			3,398,958
Redeemable preferred equity		393,338			395,156
Accumulated equity		754,303			957,968
	$	4,390,573		$	4,752,082

Company's share of accumulated equity	$	97,977		$	115,871
Redeemable preferred equity		393,338			395,156
Basis differentials		(36,117	)		(42,402	)
Deferred development fees, net of portion related to the Company's interest		(2,651	)		(2,449	)
Amounts payable to the Company		1,584			1,556
Investments in and Advances to Joint Ventures	$	454,131		$	467,732

	For the Year Ended December 31,
	2016			2015			2014
Condensed Combined Statements of Operations
Revenues from operations	$	513,365		$	524,697		$	485,764
Expenses from operations:
Operating expenses		144,984			146,924			140,615
Impairment charges^(A)		13,598			52,700			21,583
Depreciation and amortization		195,198			207,816			151,651
Interest expense		132,943			140,701			171,803
Preferred share expense		33,418			25,991			7,355
Other (income) expense, net		23,513			30,235			37,970
		543,654			604,367			530,977
Loss before tax expense and discontinued operations		(30,289	)		(79,670	)		(45,213	)
Income tax expense (primarily Sonae Sierra Brasil), net		—			—			(6,565	)
Loss from continuing operations		(30,289	)		(79,670	)		(51,778	)
Discontinued operations:
Loss from discontinued operations^(A)		—			—			(13,955	)
Gain on disposition of real estate, net of tax		—			—			55,020
Loss before gain on disposition of real estate, net		(30,289	)		(79,670	)		(10,713	)
Gain on disposition of real estate, net		57,261			17,188			10,116
Net income (loss) attributable to unconsolidated joint ventures	$	26,972		$	(62,482	)	$	(597	)
Income attributable to non-controlling interests		—			—			(2,022	)
Net income (loss) attributable to unconsolidated joint ventures	$	26,972		$	(62,482	)	$	(2,619	)
Company's share of equity in net income (loss) of joint ventures^(B)	$	11,650		$	(5,289	)	$	9,218
Basis differential adjustments^(B)		4,049			2,154			1,771
Equity in net income (loss) of joint ventures^(B)	$	15,699		$	(3,135	)	$	10,989

(A)

For the years ended December 31, 2016, 2015 and 2014, the Company’s proportionate share was $2.7 million, $10.5 million and $4.4 million, respectively. Impairment charges included in discontinued operations related to asset sales were $11.1 million for the year ended December 31, 2014, of which the Company’s proportionate share was $0.8 million. 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 appropriate, as discussed below. Reflected in discontinued operations are 37 properties sold in 2014.

(B)

The difference between the Company’s share of net income (loss), as reported above, and the amounts included in the Company’s consolidated statements of operations is attributable to the amortization of basis differentials, the recognition of deferred gains and differences in gain (loss) on sale of certain assets recognized due to the basis differentials and other than temporary impairment charges. The Company does not record income or loss from those investments in which its investment basis is zero. There were no such investments at December 31, 2016.

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,
	2016		2015		2014
Management and other fees	$	28.6	$	26.0	$	24.9
Interest income		33.4		26.0		11.0
Development fees and leasing commissions		7.5		6.8		6.4

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 or to initiate a purchase or sale of the properties 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.

Disposition of Shopping Centers

In 2016, the Company’s joint ventures sold 17 shopping centers and land for an aggregate sales price of $214.6 million, of which the Company’s share of the gain on sale was $13.8 million.

BRE DDR Retail Holdings Joint Venture Acquisitions

The Company’s unconsolidated investments with The Blackstone Group L.P. (“Blackstone”), (the “BRE DDR Joint Ventures”), were completed on similar terms. Blackstone owns 95% of the common equity of the BRE DDR Joint Ventures, and consolidated affiliates of DDR own the remaining 5%. The Company’s preferred equity investment was $386.1 million plus $7.2 million of accrued interest at December 31, 2016, with an annual interest rate of 8.5%. The Company is entitled to certain preferential cumulative distributions payable out of operating and capital proceeds pursuant to the terms and conditions of the preferred equity. This distribution is recognized as interest income within the Company’s consolidated statements of operations and classified as a note receivable in Investments in and Advances to Joint Ventures on the Company’s consolidated balance sheets. Blackstone has the right to defer up to 23.5% of the preferred equity fixed distributions, which have an annual interest rate of 8.5% for any deferred and unpaid preferred distributions. The preferred equity is redeemable (1) at Blackstone’s option, in whole or in part, following acquisition of the properties, subject to early redemption premiums; (2) at DDR’s option after seven years; (3) at varying levels based upon specified financial covenants upon a sale of properties over a certain threshold and (4) upon the incurrence of additional indebtedness by the joint venture. The Company provides leasing and property management services to all of the joint venture properties. The Company cannot be removed as the property and leasing manager until the preferred equity is redeemed in full (except for certain specified events).

Investment Interests Sold

In 2016, the Company sold its approximate 25% membership interest in 10 assets to its joint venture partner and recorded a loss on sale of $1.1 million, which is included in Loss on Sale and Change in Control of Interests, net, in the Company’s consolidated statement of operations. In 2015, the Company sold its 50% membership interest in a property management company to its joint venture partner and recorded a loss on sale of $6.5 million, which is included in Gain on Sale and Change in Control of Interests, net in the Company’s consolidated statements of operations. In addition, in 2015, the Company sold two shopping centers to this former joint venture partner for an aggregate sales price of $112.3 million, and the Company recorded a Gain on Sale of $59.8 million.

Sonae Sierra Brazil BV SARL (“SSB”)

On April 28, 2014, affiliates of DDR sold to Mr. Alexander Otto and certain of his affiliates the Company’s 50% ownership interest in SSB for approximately $343.6 million, which represented the Company’s entire investment in Brazil. SSB owned an approximate 66% interest in a publicly traded company in Brazil, Sonae Sierra Brasil, S.A., which owned 10 shopping centers in Brazil and had an indirect interest in the Parque Dom Pedro shopping center. The Company’s effective economic ownership in this investment was approximately 33%. The Company recorded a Gain on Sale of Interests of $83.7 million in 2014, which included the reclassification of $19.7 million of foreign currency translation from Accumulated OCI (Note 11). See discussion of related party transactions (Note 14). The weighted-average exchange rate used for recording the equity in net income in U.S. dollars was 2.26 for the Company’s ownership period, January 1, 2014 to April 28, 2014.