$17B MSF 95.5%

Transcription

1 INVESTOR UPDATE

2 SAFE HARBOR DDR 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, 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; constructing properties or expansions that produce a desired yield 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; and the success of our capital recycling strategy. 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 Form 10-K for the year ended December 31, 2014, as amended. The Company undertakes no obligation to publicly revise these forward-looking statements to reflect events or circumstances that arise after the date hereof. 2

3 OVERVIEW

4 DDR OVERVIEW AND INVESTMENT THESIS $17B MSF 95.5% AUM # PROPERTIES TOTAL GLA LEASED RATE Invest in market dominant prime power centers located in large and supply-constrained markets occupied by high credit quality retailers that cater to the consumer s desire for value and convenience Experienced management team with diverse retail and investment backgrounds, shareholder centric, and free from conflicts of interest Unique, scalable operating platform that drives strong and consistent results and creates incremental value Focused on NAV growth and long-term value creation Prudent risk profile with free cash flow to reinvest in the portfolio and room to further grow the dividend 4

5 DDR GREW FFO BY 18% DESPITE SELLING NEARLY 200 ASSETS SINCE YEAR-END % OPERATING FFO GROWTH, % 15% 10% 5% 0% FRT DDR REG WRI EQY KIM RPAI Growth calculated using the midpoint of most recent 2015 FFO guidance range. 5

6 THE CORRELATION BETWEEN MULTIPLE AND GROWTH SUGGESTS ROOM FOR MULTIPLE EXPANSION 2015 FFO Multiple FRT 25x REG 22x RPAI KIM WRI 19x KRG DDR BRX 16x 13x 10x - 10% - 5% 0% 5% 10% 15% E FFO Growth DDR IS ~4 TURNS BELOW THE WARRANTED VALUATION, BASED ON YOY FFO GROWTH 6

7 LOWER RISK PROFILE ALLOWS FOR HIGHER PAYOUT RATIO GOING FORWARD 80% CURRENT FFO PAYOUT RATIO 70% Peer Average = 62% 60% 50% 47% 49% 53% 56% 40% 30% 20% 23% 10% 0% EQY RPAI KIM WRI REG FRT KRG BRX DDR 2011 DDR 2012 DDR 2013 DDR 2014 DDR 2015 Source: Bloomberg, Company Reports; 2015 payout ratio calculated using the midpoint of FFO guidance range 7

8 CAPITAL ALLOCATION IS DDR S TOP PRIORITY $2.0 43% ACQUIRED OVER 40% OF YE09 GROSS ASSET VALUE ACQUISITIONS DISPOSITIONS $1.5 $1.0 SINCE THE BEGINNING OF 2010, DDR HAS TURNED OVER MORE THAN 65% OF ITS GROSS ASSET VALUE BILLIONS $0.5 $0.0 -$0.5 36% -$1.0 29% 25% -$ YTD SOLD 25% OF YE09 GROSS ASSET VALUE 8

9 INTENSE FOCUS ON INCREASING RENT PSF HAS YIELDED ATTRACTIVE GROWTH RENT PER SQUARE FOOT $ % CAGR $14.00 $14.15 $14.29 $13.50 $13.53 $13.00 $12.50 $12.00 $12.45 $12.85 $ Q15 9

10 PORTFOLIO QUALITY UPGRADE TRANSLATES INTO INCREASING PRICING POWER 10% 8% > 95% LEASED OVER 280BP OF PRICING POWER 12% 10% BLENDED SPREAD LEASED % 96% 95% 6% < 95% LEASED 8% 94% 6% 4% 93% 4% 2% 2% 92% 0% 2014 LEASING SPREAD 0% % 10

11 DDR S MANAGEMENT TEAM HAS DECADES OF OPERATIONS EXPERIENCE EXECUTIVE TITLE YEARS IN INDUSTRY EXECUTIVE TITLE YEARS IN INDUSTRY Senior Vice President - Peripheral Development 28 Senior Vice President - Leasing - Western Region 18 Ken Stern Anthony Vodicka Senior Vice President - Leasing 23 Senior Vice President - Leasing 15 David Dieterle Bryan Zabell Vice President - Leasing - Eastern Region 22 Senior Vice President - National Accounts 13 James Bold Bill Kern 11

12 SHAREHOLDER-FRIENDLY CORPORATE GOVERNANCE FOSTERS ETHICAL LEADERSHIP AND TRANSPARENCY P P P P P P COMPENSATION DICTATED BY LONG TERM SHAREHOLDER VALUE CREATION NOT FFO EQUITY COMPENSATION > CASH COMPENSATION NON-STAGGERED BOARD MAJORITY INDEPENDENT DIRECTORS SEPARATE CHAIRMAN AND CEO NO POISON PILL BEST PRACTICES NOTABLE UPDATES David Oakes has joined the board of directors Four board members did not stand for reelection in 2015 Alexander Otto, whose family owns 17% of DDR s outstanding stock, joined DDR s board of directors in 2015 P NO SHAREHOLDER RIGHTS PLAN DDR achieved 92% approval in 2014 s Say-On-Pay vote to approve the compensation of named executive officers P SIX OF THE NINE DIRECTORS ARE INDEPENDENT 12

13 OVER THE LAST 20 YEARS, REITS OUTPERFORMED A 60/40 STOCKS AND BONDS ALLOCATION BY 280 BP 14% TWENTY YEAR ANNUALIZED RETURNS BY ASSET CLASS, % 12% 10% 10% 9% 8% 6% 6% 6% 6% 5% 4% 2% 3% 3% 2% 0% REITs S&P /40 Stocks & Bonds Bonds Gold Oil EAFE Homes Average Investor Inflation Source: J.P. Morgan Asset Management, Guide to the Markets, U.S. 2Q

14 HISTORICAL DATA DOES NOT VALIDATE FEARS SURROUNDING THE CORRELATION BETWEEN REITS AND RISING INTEREST RATES CUMULATIVE Δ (BP) 10-YEAR TREASURY YIELD IMPLIED CAP RATE RISING RATES ARE DRIVEN BY A STRENGTHENING ECONOMY AND HEALTHY CONSUMER FUNDAMENTALS ' The correlation between DDR s returns and the 10-Year Treasury from is less than 3%. Source: Cohen & Steers, What History Tells Us About Rising Rates 14

15 THE POWER CENTER THESIS

16 NEVER UNDERESTIMATE THE U.S. CONSUMER $500 U.S. RETAIL SALES $450 $400 $350 IN BILLIONS $300 $250 $200 $150 $ % Long-Term Annual Growth $50 $ Source: US Census Bureau 16

17 JOBS AND WAGES MOST INFLUENCE THE US CONSUMER OVER THE LONG TERM 10% 8% 6% 4% 2% 0% -2% -4% 83% CORRELATION BETWEEN WAGE GROWTH AND RETAIL SALES Wage Growth, Y/Y Retail Sales - SA ex-autos and Gas Y/Y % -6% % CORRELATION BETWEEN EMPLOYMENT GROWTH AND RETAIL SALES 4% 10% Non-Farm Payrolls, Y/Y Retail Sales - SA ex-autos and Gas Y/Y % 8% 2% 6% 0% 4% 2% -2% 0% -4% -2% -4% -6% -6% Source: Credit Suisse Equity Research (Bureau of Labor Statistics, Credit Suisse estimates, company data) 17

18 AND WILL BENEFIT FROM HISTORICALLY LOW UNDEREMPLOYMENT AND HIGH CONSUMPTION 18% 17% 16% 15% SEASONALLY ADJUSTED UNDEREMPLOYMENT UNDEREMPLOYMENT: HIGHLY-SKILLED LABOR EMPLOYED IN LOW-PAYING JOBS OR WORKING BELOW CAPACITY UPWARD PRESSURE ON WAGE GROWTH REAL PERSONAL CONSUMPTION EXPENDITURES PER CAPITA $36 $35 OUTPACING PRE- RECESSION HIGHS 14% 13% 12% 11% THOUSANDS $34 $33 10% 9% 8% NATURAL RATE OF UNDEREMPLOYMENT $32 7% E $ E Source: Bureau of Labor Statistics, Goldman Sachs Investment Research, Federal Reserve Bank of St. Louis 18

19 IMPROVING CONSUMER BALANCE SHEETS IMPLY ADDITIONAL SPENDING CAPACITY 19% HOUSEHOLD FINANCIAL OBLIGATIONS RATIO DEBT AND FINANCIAL OBLIGATIONS AS A PERCENT OF DISPOSABLE PERSONAL INCOME 18% 17% 16% APART FROM 4Q12, THE CURRENT FINANCIAL OBLIGATION RATIO IS THE LOWEST IT HAS BEEN 33 YEARS 15% Federal Reserve Board, Bank of America Merrill Lynch 19

20 RELATIVE TO TOTAL U.S. RETAIL SALES, DDR S TOP TENANTS HAVE WON THE MARKET SHARE BATTLE THROUGHOUT THE CYCLES TOTAL SALES GROWTH (INDEXED TO 100) US RETAIL WMT DKS BBBY KSS ROST TJX TGT WFM PETM BBY

21 OUR TOP TENANTS ARE WINNING THE MARKET SHARE BATTLE 100% 80% 60% 40% 20% 0% Value/Convenience: Discounters, Warehouse Clubs, Dollar Stores, Specialty Grocers Dept. Stores: JCPenney, Macy s, Nordstrom, Bloomingdale s, Saks, Dillard s, Bon-Ton Department stores are losing market share at more than 2.5% annually % 55% 45% 35% 70% of DDR s wholly-owned Prime assets contain a grocery component Traditional Grocers: Ahold, Delhaize, Kroger, Publix, Supervalu, Safeway Non-Traditional Grocers: Walmart, Target, Costco, BJ s, Sam s Club, Whole Foods, The Fresh Market, Trader Joe s, Sprouts Farmers Market, Fresh Thyme Source: US Census Bureau 21

22 CONSUMERS CONTINUE TO SPREAD THEIR GROCERY SHOPPING ACROSS MULTIPLE CHANNELS EXPECTED CHANGE IN STORE COUNT, E EXPECTED CHANGE IN MARKET SHARE, E 20, (50) WHOLE FOODS, THE FRESH MARKET, ETC. SAM S CLUB, COSTCO, WALMART, ETC. TRADER JOE S, ALDI, SAVE-A-LOT, ETC. DOLLAR GENERAL, DOLLAR TREE, ETC BASIS POINTS (100) (150) (200) (250) DOLLAR, DRUG, CONVENIENCE STORES WHOLESALE, SUPERCENTERS ORGANIC LIMITED ASSORTMENT (576) TRADITIONAL SUPERMARKETS (300) (350) ORGANIC WHOLESALE, SUPERCENTER LIMITED ASSORTMENT DOLLAR, DRUG, CONVENIENCE STORES (303) TRADITIONAL SUPERMARKETS Source: JLL, Willard Bishop. Traditional supermarkets are defined as stores offering groceries, meat, and produce, with 15,000-60,000 SKUs and at least $2M in annual sales. 22

23 WHAT YOU NEED TO KNOW ABOUT DDR S PUERTO RICO PORTFOLIO 11% Puerto Rico as a percentage of DDR s pro rata base rent 60% Estimated value of the top three Prime + malls as a % of the total portfolio >$500psf In-line tenant sales performance of those top three enclosed malls 3.6% Debt coupon on the 7-year, non-recourse loan encumbering Plaza Escorial completed in / 15 Prime + or Prime assets, representing 90% of portfolio value 70% Base rent derived from U.S. based credit-worth tenants +2.4% Total NOI growth from 2013 to Years Weighted average lease term remaining 23

24 WHILE DEMAND IS STRONG, SUPPLY OF POWER CENTERS PER CAPITA IS DECLINING U.S. POWER CENTER GLA PER CAPITA POWER CENTER GLA PER CAPITA HAS DECREASED BY 2% SINCE 2010 AFTER GROWING NEARLY 5X SINCE

25 SHOPPING CENTERS ARE EXPERIENCING LITTLE NEW DEVELOPMENT ON AN ABSOLUTE AND RELATIVE BASIS Construction lending remains restrained as Basel III forces banks to hold 50% more capital for a construction loan 2.0% NEW DELIVERIES AS A % OF EXISTING STOCK 1.5% 1.0% 0.5% EVEN A SMALLER % MEET THE DEFINITION OF A POWER CENTER '05 - '08 '09 - '12 '13 - '14 0.0% APARTMENTS INDUSTRIAL OFFICE ALL SHOPPING CENTERS 25

26 KEY TAKEAWAYS FROM MEETINGS AT ICSC RECON THEME #1: RETAILERS CONTINE TO TRADE DOWN TO OFF-PRICE AND VALUE CONCEPTS Macy s Backstage, F21 Red, Whole Food s value, and Bloomingdale s outlet have been added to compete with TJ Maxx, Ross, and Burlington THEME #2: OUTLET BRANDS ARE EXPANDING INTO POWER CENTERS FOR MORE DESIRABLE CO-TENANCY, CONVENIENCE Nike Factory, J Crew Outlet, and Gap Outlet, in addition to traditional mall tenants like Forever 21 THEME #3: CAP RATES IN BOTH CORE AND SECONDARY MARKETS CONTINUE TO DECLINE Power centers with and without grocery anchors continue to trade sub-6% THEME #4: NON-TRADITIONAL BUYERS OF SHOPPING CENTERS CONTINUE TO EMERGE Interested parties include traditional grocery retailers, power center tenants, and B mall landlords THEME #5: THE RESURGENCE IN SMALL SHOP CONCEPTS IS CONCENTRATED IN FITNESS AND FAST CASUAL New burger, pizza, and cycle concepts, many of which are mom-and-pop shops, are spurring demand 26

27 NEW STORE OPENING PLANS CONTINUE TO BE ROBUST BASED ON RECENT MEETINGS RETAILER PREFERRED FOOTPRINT (SF) PLANNED OPENINGS TIMELINE, AND OTHER NOTABLE ITEMS: Walmart Neighborhood Market 50, Looking to open 250 stores in 2015 and 200 stores in 2016 Aldi 18, Intending to add 500 new stores over the next 4 years Panera 4, Looking to continue to open 110 stores annually Five Below 7, Their next new market will be in Los Angeles Famous Footwear 5, Annual openings of 55 stores will continue through 2017 Costco 140, Looking to open 35 stores in 2015 following 35 openings in 2015 Burlington 50, Looking to open 30 stores in both 2015 and 2016 Nordstrom Rack 35, Looking to open units annually Planet Fitness 20, Looking to open 30 stores within the next year J Crew Factory Outlet 6, Increasing presence in power centers as outlet construction has slowed Nike Factory Outlet 19, Increasing presence in power centers as outlet construction has slowed Total Wine 20, Projecting an additional 20 stores in 2016 and

28 EXISTING RETAILERS CONTINUE TO EVOLVE THEIR FOOTPRINTS AND ROLL OUT NEW CONCEPTS RETAILER PREFERRED FOOTPRINT (SF) CHANGE FROM PREVIOUS OR ALTERNATIVE FOOTPRINT Dick s Sporting Goods 100,000 Experimenting with a side-by-side concept featuring adjoined Field and Stream and Dick s Sporting Goods Macy s Backstage 35,000 Off-price concept will debut in September Nordstrom Rack 25,000 Smaller footprint will target smaller-metro markets, and will have a scaled down merchandise mix Bloomingdale s Outlet 25,000 Outlet concept will open three units in 2015, and is planning an additional 3 6 units annually Whole Foods Value Concept 25,000 New concept targets millennial shoppers, offering a lower price point in smaller-format boxes Starbucks 15,000 Will open Starbucks Roastery stores in major metros over the next few years Charlotte Russe 10,000 Fast fashion Lemonpop concept targets whole family Payless ShoeSource 7,500 Large format concept contrasts with 3,000 SF average stores, and are looking top open 30 in 2015 Macy s Micro Store 6,000 Small format concept will target street and off-mall locations, and will offer buy online, pick up in store Verizon Smart Store 5,000 Experiential store will include areas for music, gaming, tablets, phones, fitness tech, and workshops Panera 2,500 Panera To You concept provides limited seating, and plans to grow as a pick up/delivery café Massage Envy 2,000 Typical prototype is 3,500 SF; new stores are intended to reach hard-to-access markets Sally Beauty 1,750 Developing a new concept to compete with ULTA, including higher-end merchandise and salon chairs Starbucks 750 Will roll out their express stores in urban markets in

29 NEW RETAILERS PROVIDE MOMENTUM IN THE SHOP AND BOX CATEGORIES RETAILER Active Ride Shop Air Time Cinepolis Cycle Bar Jake s Wayback Burgers Lucky s Market Midici Neapolitan Pizza MOD Pizza Pet Supermarket Tin Drum Asiacafè DESCRIPTION Sells skate clothing, shoes, and skateboards, and is targeting 3,500sf stores in CA, NV, AZ, TX, CO Trampoline park operator looking for 27,500sf Midwestern locations Mexico s largest theater chain, expanding into the US; operating with luxury, traditional, and hybrid concepts Instructor-led cycling workouts expanding nationwide through franchising, looking for 2,500sf spaces Retro-style fast-food restaurant serving burgers and milkshakes, designed to compete with Five Guys Specialty grocer looking for 30,000sf spaces, run by the Wild Oats founders Fast casual pizza concept looking for 4,000sf spaces, developed by the creators of Menchie s Fast casual pizza concept looking for 2,600sf spaces and planning to double their 45 store base by YE16 Competition to PetSmart and Petco, looking for 8,000sf spaces; plans to double store count to 300 in next 5 years Fast casual Asian concept started by the creators of Tropical Smoothie Cafe 29

30 TOP 20 TENANTS HAVE STRONG CREDIT PROFILES COMPANY % OF TOTAL ABR % OF OWNED GLA 1. TJX Companies 3.4% 3.9% A+ / A3 / NR 2. PetSmart 3.0% 2.5% B+ / NR / NR 3. Bed Bath & Beyond 2.9% 3.0% A- / Baa1 / NR 4. Walmart 2.6% 5.1% AA / Aa2 / AA RATING (S&P / MOODY S / FITCH) 5. Kohl s 2.4% 3.9% BBB / Baa1 / BBB+ 6. Dick s Sporting Goods 2.2% 2.2% NR 7. Ross Stores 2.0% 2.4% A- / A3 / NR 8. Best Buy 2.0% 1.7% BB / Baa2 / BB 9. Michaels 1.8% 1.8% B+ / NR / NR 10. AMC Theatres 1.6% 0.9% B+ / NR / NR COMPANY 11. Gap / Old Navy / Banana Republic % OF TOTAL ABR % OF OWNED GLA RATING (S&P / MOODY S / FITCH) 1.6% 1.3% BBB- / Baa3 / BBB- 12. Office Depot 1.5% 1.4% B- / B2 / NR 13. Publix 1.4% 2.0% NR 14. Ulta 1.2% 0.7% NR 15. Ascena 1.1% 0.7% NR 16. Kroger 1.1% 1.6% BBB / Baa2 / BBB 17. Barnes & Noble 1.0% 0.7% NR 18. Jo-Ann 1.0% 1.2% B / Caa1 / NR 19. Lowe s 1.0% 2.0% A- / A3 / NR 20. Staples 0.9% 0.8% BBB- / Baa2 / BBB- Total 35.7% 39.8% 30

31 WHY WE ARE INVESTING IN POWER CENTERS METRIC POWER CENTERS GROCERY ANCHORED NEIGHBORHOOD CENTERS 1. SCALE = FLEXIBILITY >40 acres, >350ksf acres, ~125ksf 2. CREDIT QUALITY >75% ABR from Nationals ~25% ABR from Nationals 3. COLLECTION RISK Low: National Tenants High: Local Tenants 4. TRADE AREA POPULATION 350k+ 200k- 5. ANCHOR LOSS IMPLICATIONS Minimal/Opportunity Disastrous 6. MARKET SHARE TREND Gaining Losing 7. SITE PLAN CONTROL Flexible Inflexible 8. ANNUAL ROLLOVER ~10% ~20% 9. ECONOMIES OF SCALE Relationships/Co-Tenancy Health of grocer is all that matters 10. MERCHANT TYPE Food, Service, Hardlines, Softlines, Entertainment, Mass Merchants, Home Food and Service 31

32 THE OCCUPANCY COST OF DDR S TOP TENANTS HIGHLIGHT THE EFFICIENCY OF BRICK-AND-MORTAR OCCUPANCY COST 10% 9.8% GROSS SHIPPING COSTS / NET SALES 8% 6.4% 6.5% 6.6% 6.7% 6% 4% 3.8% 4.1% 4.4% 4.8% 2% 0% WFM ROST JWN PETM BBBY DKS TJX ULTA AMZN 32

33 POWER CENTER PRICE DISCOVERY Institutional quality power center transactions not involving DDR: DATE MARKET PRICE (MIL) PRICE PSF CAP RATE ANCHORS 4Q13 Austin % Home Depot, Best Buy, Marshalls, Chair King, Bed Bath & Beyond 4Q13 San Francisco % Lowe's, Costco, Kohl's, Toys R Us, TJ Maxx, Jo-Ann, Nordstrom Rack 4Q13 Seattle % Regal, Dick's Sporting Goods, LA Fitness, Ross, Marshalls 4Q13 Denver % 24 Hour Fitness, Dick's Sporting Goods, Best Buy, Sprouts 4Q13 Denver % JC Penney, AMC, Ross, REI, H&M, Staples, Forever 21 4Q13 Atlanta % Bed Bath & Beyond, Havertys, TJ Maxx, PetSmart 1Q14 Philadelphia % Home Depot, BJ s Wholesale, Conway s, PetSmart, Staples, Walgreens 3Q14 Los Angeles % Old Navy, Nordstrom Rack, Men s Wearhouse, Marshalls 3Q14 Chicago % Fresh Farms, Babies R Us, Ross, Walgreens 3Q14 Wash. DC % Whole Foods, Michaels, Modell's, Gold's Gym, CVS 3Q14 Orlando % Kohl's, Ross, Bed Bath & Beyond, Regal, Sports Authority, Old Navy, Michaels 4Q14 Denver % Dick's, Kohl's, Office Depot, Petco, Sprouts 4Q14 Atlanta % Target (U), Publix, TJ Maxx, Office Depot, Dick's, PetSmart 4Q14 Charlotte % Marshalls, PetSmart, Old Navy, Best Buy, Office Max 1Q15 Minneapolis % Cub Foods, Kohl's, HomeGoods, TJM, Nordstrom Rack 1Q15 Los Angeles % Lowe's, Ross, Sports Authority, PetSmart, Ulta 1Q15 Los Angeles % Marshalls, PetSmart, Michaels 1Q15 Denver % Target, TJ Maxx, HomeGoods, Michaels, Golf Galaxy, PetSmart 2Q15 Oklahoma City % Walmart, Babies R Us, Nordstrom Rack, Ulta, Shoe Carnival, Kirkland s 2Q15 Northern New Jersey % Nordstrom Rack, DSW, TJ Maxx, buybuybaby, Cost Plus World Market, Ulta $2,073 $ % 33

34 PORTFOLIO MANAGEMENT

35 ~75% OF PORTFOLIO VALUE CONSISTS OF JUST 115 ASSETS (PRIME+ AND PRIME) Values shown at pro rata 5% OF VALUE 40 ASSETS WHOLLY OWNED NON-PRIME JOINT VENTURE 7% OF VALUE 188 ASSETS 14% OF VALUE 64 ASSETS WHOLLY OWNED PRIME- WHOLLY OWNED PRIME+ 44% OF VALUE 47 ASSETS WHOLLY OWNED PRIME 30% OF VALUE 68 ASSETS 35

36 DECONSTRUCTING THE PORTFOLIO: WHOLLY OWNED PRIME + INVESTMENT THESIS: Long-term hold WHOLLY OWNED NON-PRIME JOINT VENTURE METRIC AVERAGE EST. CAP RATE 4.75% % # OF ASSETS 47 WHOLLY OWNED PRIME- 44% OF VALUE WHOLLY OWNED PRIME+ NOI CAGR (5 YEAR) > 3.0% VALUE ~ $105 M VALUE PSF ~ $270 SIZE ~ 500 KSF ABR PSF ~ $17.00 LEASED RATE ~ 95% WHOLLY OWNED PRIME TRADE AREA POPULATION TRADE AREA HH INCOME ~ 650 K ~ $90 K 36

37 DECONSTRUCTING THE PORTFOLIO: WHOLLY OWNED PRIME INVESTMENT THESIS: Long-term hold with a focus on upgrading merchandise mix and enhancing market dominance WHOLLY OWNED NON-PRIME JOINT VENTURE METRIC AVERAGE EST. CAP RATE 6.0% - 6.5% # OF ASSETS 68 WHOLLY OWNED PRIME- 30% OF VALUE WHOLLY OWNED PRIME WHOLLY OWNED PRIME+ NOI CAGR (5 YEAR) ~ 3.5% VALUE ~ $50 M VALUE PSF ~ $195 SIZE ~ 330 KSF ABR PSF ~ $14.05 LEASED RATE ~ 93% TRADE AREA POPULATION ~ 385 K TRADE AREA HH INCOME ~ $82 K 37

38 DECONSTRUCTING THE PORTFOLIO: WHOLLY OWNED PRIME - INVESTMENT THESIS: Evaluate for investment to increase growth profile or for short or medium term disposition WHOLLY OWNED NON-PRIME JOINT VENTURE METRIC AVERAGE EST. CAP RATE 6.75% % # OF ASSETS 64 14% OF VALUE WHOLLY OWNED PRIME- WHOLLY OWNED PRIME+ NOI CAGR (5 YEAR) ~ 3.0% VALUE ~ $24 M VALUE PSF ~ $125 SIZE ~ 260 KSF ABR PSF ~ $10.70 LEASED RATE ~ 93% WHOLLY OWNED PRIME TRADE AREA POPULATION TRADE AREA HH INCOME ~ 290 K ~ $71 K 38

39 DECONSTRUCTING THE PORTFOLIO: WHOLLY OWNED NON-PRIME INVESTMENT THESIS: Near-term disposition to mitigate risk 5% OF VALUE WHOLLY OWNED NON-PRIME JOINT VENTURE METRIC AVERAGE EST. CAP RATE 7.50% % # OF ASSETS 40 NOI CAGR (5 YEAR) ~ -0.5% WHOLLY OWNED PRIME- WHOLLY OWNED PRIME+ VALUE ~ $16 M VALUE PSF ~ $90 SIZE ~ 235 KSF ABR PSF ~ $9.30 LEASED RATE ~ 88% WHOLLY OWNED PRIME TRADE AREA POPULATION ~ 270 K TRADE AREA HH INCOME ~ $68K 39

40 WHAT S LEFT OF NON-PRIME? % OF NON-PRIME VALUE Values shown at pro rata $ in millions JOINT VENTURES 11% CATEGORY # OF ASSETS % OF NON-PRIME VALUE STRATEGY MARKETING 21% SINGLE TENANT 12% DEBT 17% LEASE UP 40% LEASE UP 13 40% Sell after lease up MARKETING FOR SALE 18 21% DEBT 4 17% Sell at maturity Currently in the market or under contract SINGLE TENANT 5 12% Sell after renewal JOINT VENTURES 57 11% TOTALS % 40

41 DISPOSITIONS: EVOLVING QUALITY 2011: DISTRESSED SALES Pine Ridge Square (Gaylord, MI) ~ 12% cap rate 2012: EXITING NON-CORE PROPERTY TYPES Tiffin Mall (Tiffin, OH) ~ 10% cap rate 2013: EXITING LOW GROWTH IN WEAK MARKETS Carlisle Commons (Harrisburg, PA) ~ 8% cap rate 2014: TAKING ADVANTAGE OF PRICING ENVIRONMENT Abernathy Square (Atlanta, GA) ~ 6% cap rate 41

42 THE EVOLUTION OF THE PORTFOLIO FROM SMALLER, LOWER QUALITY ASSETS INTO LARGE FORMAT PRIME POWER CENTERS CONTINUES # OF ASSETS # OF ASSETS AND TOTAL GLA (WHOLLY-OWNED) 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 AVERAGE ASSET SIZE (WHOLLY-OWNED) SF, IN 000s % CHANGE IN # OF ASSETS +61% CHANGE IN AVG ASSET SIZE 175 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 42

43 THE PORTFOLIO HAS MOVED UP THE QUALITY SPECTRUM 2008 PORTFOLIO (LESS) DISPOSITIONS (ADD) ACQUISITIONS / DEVELOPMENT (EQUALS) CURRENT PORTFOLIO ASSET COUNT TOTAL SQUARE FEET (MIL) AVERAGE SIZE 190, , , ,000 LEASED RATE 92.6% 86.1% 93.2% 95.5% RENT PSF $12.34 $11.02 $13.89 $14.02 POPULATION (TRADE AREA) 220, , ,000 HH INCOME (TRADE AREA) $68,000 $82,000 $82,000 ORGANIC GROWTH OPPORTUNITY 43

44 THE PORTFOLIO HAS EXPERIENCED A DRAMATIC QUALITY UPGRADE SINCE 2010 CONSOLIDATED PORTFOLIO # OF ASSETS AVG ASSET SIZE (KSF) AVG ASSET VALUE (MIL) $23 $49 CONSOLIDATED AS % TOTAL 81% 93% TOTAL PORTFOLIO LEASED RATE 91.2% 95.5% RENT PSF $12.46 $14.02 ABR FROM TOP 50 MSAs 57% 77% TRADE AREA POPULATION 359K 439K RETAILERS THAT HAVE MOVED INTO DDR S TOP 50 RETAILERS THAT HAVE MOVED OUT OF DDR S TOP 25 44

45 AGGRESSIVE PORTFOLIO REPOSITIONING WILL CONTINUE 2008 CURRENT TARGET TOTAL MSAs <75 Defined by media markets TOTAL STATES ~30 Exited North Dakota, South Dakota, Vermont, Louisiana, and New Mexico ABR FROM TOP 50 MSAs 57% 76% >90% Focused only on large growth markets OFFICE / INDUSTRIAL ASSETS Further simplification of the story DOMESTIC B/C MALLS Focused on only one property type We have also Added Boston, Orlando, Minneapolis, and San Antonio to our top 20 markets Decreased the combined ABR from Buffalo and Detroit by $28 million, or 45% of total exposure 45

46 DDR HAS WOUND DOWN 15 JVS SINCE 2011 AND WILL CONTINUE TO FOCUS ON FEWER, HIGH QUALITY PARTNERS JOINT VENTURES All figures in millions, except asset counts and percentages DDR # OF # PRIME +, OWNED BOOK PARTNER OWN % ASSETS PRIME ASSETS GLA VALUE DEBT BRE DDR RETAIL HOLDINGS III Blackstone 5% $85 $62 DDRTC CORE RETAIL FUND TIAA-CREF 15% DDR DOMESTIC RETAIL FUND I Various 20% DDR-SAU RETAIL FUND State of Utah 20% OTHER Various Various TOTAL $723 $453 JVS MAKE UP APPROXIMATELY 7% OF DDR S PRO RATA GROSS ASSET VALUE 46

47 CAPITAL MARKETS

48 BALANCED MATURITY PROFILE MITIGATES RISK $1,000 CONSOLIDATED DEBT MATURITIES IN MILLIONS $800 $600 $400 REVOLVER AVAILABILITY $200 $ GAAP INTEREST RATE 4.2% 7.5% 5.8% 3.8% 5.3% 6.0% 3.8% 4.7% 3.4% 3.5% CASH INTEREST RATE 4.5% 7.7% 6.6% 3.8% 5.3% 6.1% 3.9% 4.7% 3.4% 3.5% 48

49 DEBT / EBITDA REDUCTION WILL CONTINUE 0.0x (0.1x) PRO RATA DEBT / EBITDA (BENEFIT) (0.2x) (0.3x) (0.4x) (0.5x) (0.6x) (0.7x) (0.8x) (0.15x) INCOME FROM SIGNED LEASES NOT YET OPEN (ACTUAL) (0.07x) LEASE-UP CIP (PER $100M) (0.11x) LEASED RATE INCREASE (PER 100 BP) (0.06x) (0.16x) OPERATING ASSET NON-INCOME SALES (PER $100M) PRODUCING ASSET SALES (PER $100M) (0.09x) RETAINED EARNINGS (PER $100M) 49

50 RISK REDUCTION GOES BEYOND DEBT/EBITDA EXITED ALL INTERNATIONAL MARKETS THROUGH DIVESTURE OF BRAZILIAN INVESTMENT P Eliminated currency, sovereign, and partner risk, as well as development and reporting risks specific to Brazil P Removed unnecessary complexity associated with reporting and modeling Increased debt / EBITDA TRADED LOW QUALITY ASSETS FOR HIGH QUALITY ASSETS AT A BP SPREAD P Developed a portfolio of fortress power centers that will outperform in both a bull and a bear market P Enhanced the credit quality and lowered the beta of company cash flows Increased debt / EBITDA WOUND DOWN 15 JOINT VENTURES OVER FOUR YEARS IN FAVOR OF LONGER-TERM PARTNERSHIPS P Simplified company structure and enhanced quality of fee income streams P Increased management focus on DDR s wholly-owned assets Increased debt / EBITDA ISSUED LONG-TERM, UNSECURED DEBT AT HISTORICALLY LOW INTEREST RATES P Decreased the weighted average cost of capital to approximately 6% P Extended the weighted average debt duration of the consolidated portfolio by ~1 year to 4.3 years since 2010 REDUCED LAND AND CIP AS A PERCENT OF GROSS ASSET VALUE TO 3.5% P Minimized development risk while simultaneously increasing focus on high-quality redevelopment projects (7 10% yields) P Redirected capital allocation to the highest quality assets in the portfolio INCREASED THE UNENCUMBERED POOL TO $7.5 BILLION P Over the last five years, DDR has increased unencumbered NOI by 66% and increased the average asset size by 61% P In 2015, DDR will add 8 prime assets totaling $1 billion of value to the unencumbered pool 50

51 FFO TAILWINDS WITH HIGH COUPON REFINANCINGS 10% 9% 8% 7% 6% 5% Refi at 7% = ($0.01) per share earnings Impact Refi at 5% = +$0.05 per share earnings Impact 9.63% 7.50% 4% 4.48% 3% 2% 1% 0%

52 GROWING THE UNENCUMBERED ASSET POOL The $6.8 billion unencumbered pool has improved materially in terms of size, quality and credit 2009 CURRENT CHANGE NUMBER OF ASSETS % UNENCUMBERED NOI $252 $ % % OF CONSOLIDATED NOI 49% 66% +35% UNENCUMBERED DEBT YIELD 10% 13% +30% AVERAGE ASSET SIZE 180ksf 295ksf +64% TOP CREDITS Walmart, Rite Aid, Lowe s PetSmart, Bed Bath & Beyond, TJX 52

53 DDR UNENCUMBERED FOUR FORTRESS ASSETS IN THE SECOND QUARTER In June, DDR repaid the $255 million of 6.4% (cash) secured debt; the GAAP interest rate was 2.75% The total value added to the unencumbered pool is greater than $650 million, implying <40% leverage previously on the pool LOCATION TIER KEY TENANTS Shoppers World Boston Prime + Kohl's, AMC, Macy's, Nordstrom Rack, TJ Maxx, Petsmart Woodfield Village Chicago Prime + Trader Joe's, Container Store, Nordstrom Rack Fairfax Towne Center Wash DC Prime + Safeway, Regal, TJ Maxx, Bed Bath & Beyond Carillon Place Naples Prime Walmart Neighborhood Market, Ross, TJ Maxx, Total Wine 53