10-Q 1 ddr-10q_20140930.htm 10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2014

OR

¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 1-11690

DDR Corp.

(Exact name of registrant as specified in its charter)

Ohio |  | 34-1723097
(State or other jurisdiction of incorporation or organization) |  | (I.R.S. Employer Identification No.)

3300 Enterprise Parkway, Beachwood, Ohio 44122

(Address of principal executive offices - zip code)

(216) 755-5500

(Registrant’s telephone number, including area code)

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer |  | x |  | Accelerated filer |  | ¨
Non-accelerated filer |  | ¨ (Do not check if smaller reporting company) |  | Smaller reporting company |  | ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x

As of October 31, 2014, the registrant had 360,458,592 outstanding common shares, $0.10 par value per share.

PART I

FINANCIAL INFORMATION

Item 1. FINANCIAL STATEMENTS – Unaudited |
Condensed Consolidated Balance Sheets as of September 30, 2014 and December 31, 2013 | 2
Condensed Consolidated Statements of Operations for the Three-Month Periods Ended September 30, 2014 and 2013 | 3
Condensed Consolidated Statements of Operations for the Nine-Month Periods Ended September 30, 2014 and 2013 | 4
Consolidated Statements of Comprehensive Income (Loss) for the Three- and Nine-Month Periods Ended September 30, 2014 and 2013 | 5
Consolidated Statement of Equity for the Nine-Month Period Ended September 30, 2014 | 6
Consolidated Statements of Cash Flows for the Nine-Month Periods Ended September 30, 2014 and 2013 | 7
Notes to Condensed Consolidated Financial Statements | 8

1

DDR Corp.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share amounts)

(Unaudited)

| September 30, 2014 |  |  | December 31, 2013 |
Assets |  |  |  |  |  |  |
Land | $ | 2,251,513 |  |  | $ | 2,209,970 |
Buildings |  | 7,167,118 |  |  |  | 6,949,440 |
Fixtures and tenant improvements |  | 628,407 |  |  |  | 599,221 |
|  | 10,047,038 |  |  |  | 9,758,631 |
Less: Accumulated depreciation |  | (1,893,315 | ) |  |  | (1,823,199 | )
|  | 8,153,723 |  |  |  | 7,935,432 |
Land held for development and construction in progress |  | 449,822 |  |  |  | 452,980 |
Real estate held for sale, net |  | — |  |  |  | 12,670 |
Total real estate assets, net |  | 8,603,545 |  |  |  | 8,401,082 |
Investments in and advances to joint ventures |  | 161,737 |  |  |  | 448,008 |
Cash and cash equivalents |  | 134,320 |  |  |  | 86,664 |
Restricted cash |  | 8,250 |  |  |  | 33,476 |
Notes receivable, net |  | 57,645 |  |  |  | 78,338 |
Other assets, net |  | 660,194 |  |  |  | 645,505 |
| $ | 9,625,691 |  |  | $ | 9,693,073 |
Liabilities and Equity |  |  |  |  |  |  |
Unsecured indebtedness: |  |  |  |  |  |  |
Senior notes | $ | 2,762,893 |  |  | $ | 2,754,120 |
Unsecured term loan |  | 350,000 |  |  |  | 350,000 |
Revolving credit facilities |  | 23,457 |  |  |  | 29,133 |
|  | 3,136,350 |  |  |  | 3,133,253 |
Secured indebtedness: |  |  |  |  |  |  |
Secured term loan |  | 400,000 |  |  |  | 400,000 |
Mortgage indebtedness |  | 1,699,694 |  |  |  | 1,761,421 |
|  | 2,099,694 |  |  |  | 2,161,421 |
Total indebtedness |  | 5,236,044 |  |  |  | 5,294,674 |
Accounts payable and other liabilities |  | 459,787 |  |  |  | 415,413 |
Dividends payable |  | 61,323 |  |  |  | 55,107 |
Total liabilities |  | 5,757,154 |  |  |  | 5,765,194 |
Commitments and contingencies (Note 8) |  |  |  |  |  |  |
DDR Equity: |  |  |  |  |  |  |
Class H—7.375% cumulative redeemable preferred shares, without par value, $500 liquidation value; 750,000 shares authorized; 110,000 shares issued and outstanding at December 31, 2013 |  | — |  |  |  | 55,000 |
Class J—6.5% cumulative redeemable preferred shares, without par value, $500 liquidation value; 750,000 shares authorized; 400,000 shares issued and outstanding at September 30, 2014 and December 31, 2013 |  | 200,000 |  |  |  | 200,000 |
Class K—6.25% cumulative redeemable preferred shares, without par value, $500 liquidation value; 750,000 shares authorized; 300,000 shares issued and outstanding at September 30, 2014 and December 31, 2013 |  | 150,000 |  |  |  | 150,000 |
Common shares, with par value, $0.10 stated value; 600,000,000 shares authorized; 360,338,486 and 359,378,751 shares issued at September 30, 2014 and December 31, 2013, respectively |  | 36,034 |  |  |  | 35,938 |
Paid-in capital |  | 5,434,217 |  |  |  | 5,417,363 |
Accumulated distributions in excess of net income |  | (1,975,043 | ) |  |  | (1,915,638 | )
Deferred compensation obligation |  | 17,057 |  |  |  | 16,702 |
Accumulated other comprehensive loss |  | (8,445 | ) |  |  | (36,493 | )
Less: Common shares in treasury at cost: 1,038,474 and 1,030,053 shares at September 30, 2014 and December 31, 2013, respectively |  | (18,475 | ) |  |  | (18,211 | )
Total DDR shareholders' equity |  | 3,835,345 |  |  |  | 3,904,661 |
Non-controlling interests |  | 33,192 |  |  |  | 23,218 |
Total equity |  | 3,868,537 |  |  |  | 3,927,879 |
| $ | 9,625,691 |  |  | $ | 9,693,073 |

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE

CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.

2

DDR Corp.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE THREE-MONTH PERIODS ENDED SEPTEMBER 30,

(In thousands, except per share amounts)

(Unaudited)

| 2014 |  |  | 2013 |
Revenues from operations: |  |  |  |  |  |  |
Minimum rents | $ | 175,771 |  |  | $ | 140,389 |
Percentage and overage rents |  | 519 |  |  |  | 854 |
Recoveries from tenants |  | 59,261 |  |  |  | 45,963 |
Fee and other income |  | 14,992 |  |  |  | 19,194 |
|  | 250,543 |  |  |  | 206,400 |
Rental operation expenses: |  |  |  |  |  |  |
Operating and maintenance |  | 37,311 |  |  |  | 33,107 |
Real estate taxes |  | 35,681 |  |  |  | 26,694 |
Impairment charges |  | 1,813 |  |  |  | 9,260 |
General and administrative |  | 19,540 |  |  |  | 19,246 |
Depreciation and amortization |  | 99,480 |  |  |  | 70,015 |
|  | 193,825 |  |  |  | 158,322 |
Other income (expense): |  |  |  |  |  |  |
Interest income |  | 2,652 |  |  |  | 6,692 |
Interest expense |  | (58,115 | ) |  |  | (54,740 | )
Other income (expense), net |  | (2,758 | ) |  |  | (2,282 | )
|  | (58,221 | ) |  |  | (50,330 | )
Loss before earnings from equity method investments and other items |  | (1,503 | ) |  |  | (2,252 | )
Equity in net income of joint ventures |  | 3,620 |  |  |  | 3,780 |
Gain on sale and change in control of interests, net |  | 3,984 |  |  |  | — |
Income before tax benefit (expense) of taxable REIT subsidiaries and state franchise and income taxes |  | 6,101 |  |  |  | 1,528 |
Tax benefit (expense) of taxable REIT subsidiaries and state franchise and income taxes |  | 212 |  |  |  | (404 | )
Income from continuing operations |  | 6,313 |  |  |  | 1,124 |
Income (loss) from discontinued operations |  | 57,906 |  |  |  | (3,258 | )
Income (loss) before gain on disposition of real estate |  | 64,219 |  |  |  | (2,134 | )
Gain on disposition of real estate, net of tax |  | 2,262 |  |  |  | 1,929 |
Net income (loss) | $ | 66,481 |  |  | $ | (205 | )
Non-controlling interests |  | 2,125 |  |  |  | (170 | )
Net income (loss) attributable to DDR | $ | 68,606 |  |  | $ | (375 | )
Preferred dividends |  | (5,594 | ) |  |  | (6,608 | )
Net income (loss) attributable to DDR common shareholders | $ | 63,012 |  |  | $ | (6,983 | )
Per share data: |  |  |  |  |  |  |
Basic earnings per share data: |  |  |  |  |  |  |
Income (loss) from continuing operations attributable to DDR common shareholders | $ | 0.01 |  |  | $ | (0.01 | )
Income (loss) from discontinued operations attributable to DDR common shareholders |  | 0.16 |  |  |  | (0.01 | )
Net income (loss) attributable to DDR common shareholders | $ | 0.17 |  |  | $ | (0.02 | )
Diluted earnings per share data: |  |  |  |  |  |  |
Income (loss) from continuing operations attributable to DDR common shareholders | $ | 0.01 |  |  | $ | (0.01 | )
Income (loss) from discontinued operations attributable to DDR common shareholders |  | 0.16 |  |  |  | (0.01 | )
Net income (loss) attributable to DDR common shareholders | $ | 0.17 |  |  | $ | (0.02 | )

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE

CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.

3

DDR Corp.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE NINE-MONTH PERIODS ENDED SEPTEMBER 30,

(In thousands, except per share amounts)

(Unaudited)

| 2014 |  |  | 2013 |
Revenues from operations: |  |  |  |  |  |  |
Minimum rents | $ | 518,838 |  |  | $ | 406,274 |
Percentage and overage rents |  | 2,810 |  |  |  | 3,116 |
Recoveries from tenants |  | 175,353 |  |  |  | 133,234 |
Fee and other income |  | 47,928 |  |  |  | 58,519 |
|  | 744,929 |  |  |  | 601,143 |
Rental operation expenses: |  |  |  |  |  |  |
Operating and maintenance |  | 109,448 |  |  |  | 96,257 |
Real estate taxes |  | 106,132 |  |  |  | 77,434 |
Impairment charges |  | 18,898 |  |  |  | 22,902 |
General and administrative |  | 58,878 |  |  |  | 59,123 |
Depreciation and amortization |  | 302,901 |  |  |  | 198,609 |
|  | 596,257 |  |  |  | 454,325 |
Other income (expense): |  |  |  |  |  |  |
Interest income |  | 8,937 |  |  |  | 20,365 |
Interest expense |  | (179,908 | ) |  |  | (157,346 | )
Other income (expense), net |  | (11,881 | ) |  |  | (3,287 | )
|  | (182,852 | ) |  |  | (140,268 | )
(Loss) income before earnings from equity method investments and other items |  | (34,180 | ) |  |  | 6,550 |
Equity in net income of joint ventures |  | 10,241 |  |  |  | 5,543 |
Impairment of joint venture investments |  | (9,100 | ) |  |  | — |
Gain on sale and change in control of interests, net |  | 87,814 |  |  |  | 1,066 |
Income before tax expense of taxable REIT subsidiaries and state franchise and income taxes |  | 54,775 |  |  |  | 13,159 |
Tax expense of taxable REIT subsidiaries and state franchise and income taxes |  | (1,120 | ) |  |  | (2,463 | )
Income from continuing operations |  | 53,655 |  |  |  | 10,696 |
Income (loss) from discontinued operations |  | 68,697 |  |  |  | (27,872 | )
Income (loss) before gain on disposition of real estate |  | 122,352 |  |  |  | (17,176 | )
Gain on disposition of real estate, net of tax |  | 2,645 |  |  |  | 347 |
Net income (loss) | $ | 124,997 |  |  | $ | (16,829 | )
Non-controlling interests |  | 2,985 |  |  |  | (556 | )
Net income (loss) attributable to DDR | $ | 127,982 |  |  | $ | (17,385 | )
Write-off of preferred share original issuance costs |  | (1,943 | ) |  |  | (5,246 | )
Preferred dividends |  | (18,460 | ) |  |  | (21,113 | )
Net income (loss) attributable to DDR common shareholders | $ | 107,579 |  |  | $ | (43,744 | )
Per share data: |  |  |  |  |  |  |
Basic earnings per share data: |  |  |  |  |  |  |
Income (loss) from continuing operations attributable to DDR common shareholders | $ | 0.10 |  |  | $ | (0.05 | )
Income (loss) from discontinued operations attributable to DDR common shareholders |  | 0.20 |  |  |  | (0.09 | )
Net income (loss) attributable to DDR common shareholders | $ | 0.30 |  |  | $ | (0.14 | )
Diluted earnings per share data: |  |  |  |  |  |  |
Income (loss) from continuing operations attributable to DDR common shareholders | $ | 0.10 |  |  | $ | (0.05 | )
Income (loss) from discontinued operations attributable to DDR common shareholders |  | 0.20 |  |  |  | (0.09 | )
Net income (loss) attributable to DDR common shareholders | $ | 0.30 |  |  | $ | (0.14 | )

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE

CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.

4

DDR Corp.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

FOR THE THREE- AND NINE-MONTH PERIODS ENDED SEPTEMBER 30,

(In thousands)

(Unaudited)

| Three-Month Periods Ended September 30, |  |  | Nine-Month Periods Ended September 30, |
| 2014 |  |  | 2013 |  |  | 2014 |  |  | 2013 |
Net income (loss) | $ | 66,481 |  |  | $ | (205 | ) |  | $ | 124,997 |  |  | $ | (16,829 | )
Other comprehensive (loss) income: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Foreign currency translation |  | (1,729 | ) |  |  | (429 | ) |  |  | 6,654 |  |  |  | (16,364 | )
Reclassification adjustment for foreign currency translation included in net income |  | 5,609 |  |  |  | — |  |  |  | 25,324 |  |  |  | — |
Change in fair value of interest-rate contracts |  | 2,999 |  |  |  | (1,537 | ) |  |  | 535 |  |  |  | 11,107 |
Amortization of interest-rate contracts |  | 118 |  |  |  | 118 |  |  |  | 354 |  |  |  | 354 |
Reclassification adjustment for realized gains on available-for-sale securities included in net income |  | — |  |  |  | — |  |  |  | (840 | ) |  |  | — |
Unrealized (losses) gains on available-for-sale securities |  | (182 | ) |  |  | 2,639 |  |  |  | (649 | ) |  |  | 2,639 |
Total other comprehensive income (loss) |  | 6,815 |  |  |  | 791 |  |  |  | 31,378 |  |  |  | (2,264 | )
Comprehensive income (loss) |  | 73,296 |  |  |  | 586 |  |  |  | 156,375 |  |  |  | (19,093 | )
Comprehensive loss (income) attributable to non-controlling interests: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Allocation of net loss (income) |  | 2,125 |  |  |  | (170 | ) |  |  | 2,985 |  |  |  | (556 | )
Foreign currency translation |  | 647 |  |  |  | (290 | ) |  |  | 634 |  |  |  | 323 |
Reclassification adjustment for foreign currency translation included in net income |  | (3,964 | ) |  |  | — |  |  |  | (3,964 | ) |  |  | — |
Total comprehensive income attributable to non-controlling interests |  | (1,192 | ) |  |  | (460 | ) |  |  | (345 | ) |  |  | (233 | )
Total comprehensive income (loss) attributable to DDR | $ | 72,104 |  |  | $ | 126 |  |  | $ | 156,030 |  |  | $ | (19,326 | )

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE

CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.

5

DDR Corp.

CONSOLIDATED STATEMENT OF EQUITY

FOR THE NINE-MONTH PERIOD ENDED SEPTEMBER 30, 2014

(In thousands)

(Unaudited)

| DDR Equity |  |  |  |  |  |  |  |  |
| Preferred Shares |  |  | Common Shares |  |  | Paid-in Capital |  |  | Accumulated Distributions in Excess of Net Income |  |  | Deferred Compensation Obligation |  |  | Accumulated Other Comprehensive Loss |  |  | Treasury Stock at Cost |  |  | Non- Controlling Interests |  |  | Total |
Balance, December 31, 2013 | $ | 405,000 |  |  | $ | 35,938 |  |  | $ | 5,417,363 |  |  | $ | (1,915,638 | ) |  | $ | 16,702 |  |  | $ | (36,493 | ) |  | $ | (18,211 | ) |  | $ | 23,218 |  |  | $ | 3,927,879 |
Issuance of common shares related to stock plans |  |  |  |  |  | 12 |  |  |  | 1,399 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 824 |  |  |  |  |  |  |  | 2,235 |
Issuance of common shares for cash offering |  |  |  |  |  | 66 |  |  |  | 11,632 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 11,698 |
Issuance of restricted stock |  |  |  |  |  | 14 |  |  |  | (4,920 | ) |  |  |  |  |  |  | 855 |  |  |  |  |  |  |  | 4,051 |  |  |  |  |  |  |  | — |
Vesting of restricted stock |  |  |  |  |  | 4 |  |  |  | 4,019 |  |  |  |  |  |  |  | (500 | ) |  |  |  |  |  |  | (5,139 | ) |  |  |  |  |  |  | (1,616 | )
Stock-based compensation |  |  |  |  |  |  |  |  |  | 2,807 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 2,807 |
Issuance of OP Units |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 18,256 |  |  |  | 18,256 |
Contributions from non-controlling interests |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 93 |  |  |  | 93 |
Distributions to non-controlling interests |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | (8,720 | ) |  |  | (8,720 | )
Redemption of preferred shares |  | (55,000 | ) |  |  |  |  |  |  | 1,917 |  |  |  | (1,943 | ) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | (55,026 | )
Dividends declared-common shares |  |  |  |  |  |  |  |  |  |  |  |  |  | (167,142 | ) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | (167,142 | )
Dividends declared-preferred shares |  |  |  |  |  |  |  |  |  |  |  |  |  | (18,302 | ) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | (18,302 | )
Comprehensive income |  |  |  |  |  |  |  |  |  |  |  |  |  | 127,982 |  |  |  |  |  |  |  | 28,048 |  |  |  |  |  |  |  | 345 |  |  |  | 156,375 |
Balance, September 30, 2014 | $ | 350,000 |  |  | $ | 36,034 |  |  | $ | 5,434,217 |  |  | $ | (1,975,043 | ) |  | $ | 17,057 |  |  | $ | (8,445 | ) |  | $ | (18,475 | ) |  | $ | 33,192 |  |  | $ | 3,868,537 |

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE

CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.

6

DDR Corp.

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE NINE-MONTH PERIODS ENDED SEPTEMBER 30,

(In thousands)

(Unaudited)

| 2014 |  |  | 2013 |
Net cash flow provided by operating activities: |  |  |  |  |  |  |
Net income (loss) | $ | 124,997 |  |  | $ | (16,829 | )
Adjustments to reconcile net income (loss) to net cash flow provided by operating activities: |  |  |  |  |  |  |
Depreciation and amortization |  | 310,984 |  |  |  | 214,141 |
Stock-based compensation |  | 6,706 |  |  |  | 6,524 |
Amortization of deferred finance costs |  | 9,597 |  |  |  | 11,065 |
Accretion of convertible debt discount |  | 8,476 |  |  |  | 8,038 |
Equity in net income of joint ventures |  | (10,241 | ) |  |  | (5,543 | )
Impairment of joint venture investments |  | 9,100 |  |  |  | — |
Net gain on sale and change in control of interests |  | (87,814 | ) |  |  | (1,066 | )
Operating cash distributions from joint ventures |  | 6,358 |  |  |  | 10,533 |
Realized gain on sale of available-for-sale securities |  | (840 | ) |  |  | — |
Gain on disposition of real estate |  | (76,932 | ) |  |  | (7,587 | )
Impairment charges |  | 26,996 |  |  |  | 66,795 |
Change in notes receivable accrued interest |  | (2,583 | ) |  |  | (3,797 | )
Change in restricted cash |  | 9,440 |  |  |  | 530 |
Net change in accounts receivable |  | 319 |  |  |  | 3,238 |
Net change in accounts payable and accrued expenses |  | 14,387 |  |  |  | (1,540 | )
Net change in other operating assets and liabilities |  | (33,525 | ) |  |  | (7,824 | )
Total adjustments |  | 190,428 |  |  |  | 293,507 |
Net cash flow provided by operating activities |  | 315,425 |  |  |  | 276,678 |
Cash flow from investing activities: |  |  |  |  |  |  |
Real estate acquired, net of liabilities and cash assumed |  | (315,329 | ) |  |  | (326,661 | )
Real estate developed and improvements to operating real estate |  | (183,999 | ) |  |  | (158,909 | )
Proceeds from disposition of real estate and joint venture interest |  | 773,445 |  |  |  | 156,654 |
Equity contributions to joint ventures |  | (4,221 | ) |  |  | (20,143 | )
Repayment (issuance) of joint venture advances, net |  | 2,946 |  |  |  | (41,000 | )
Distributions of proceeds from sale and refinancing of joint venture interests |  | 9,600 |  |  |  | 1,696 |
Return of investments in joint ventures |  | 7,649 |  |  |  | 5,479 |
Purchase of available-for-sale securities |  | — |  |  |  | (1,800 | )
Proceeds from sale of available-for-sale securities |  | 1,740 |  |  |  | — |
Issuance of notes receivable |  | — |  |  |  | (22,014 | )
Repayment of notes receivable |  | 341 |  |  |  | 13,715 |
Change in restricted cash – capital improvements |  | 18,235 |  |  |  | (2,526 | )
Net cash flow provided by (used for) investing activities |  | 310,407 |  |  |  | (395,509 | )
Cash flow from financing activities: |  |  |  |  |  |  |
Repayments of revolving credit facilities, net |  | (4,390 | ) |  |  | (104,340 | )
Proceeds from issuance of senior notes, net of underwriting commissions and offering expenses of $650 in 2013 |  | — |  |  |  | 295,591 |
Proceeds from mortgages and other secured debt |  | 92,063 |  |  |  | 45,042 |
Repayment of term loans and mortgage debt |  | (434,074 | ) |  |  | (112,835 | )
Payment of debt issuance costs |  | (699 | ) |  |  | (3,921 | )
Redemption of preferred shares |  | (55,000 | ) |  |  | (150,000 | )
Proceeds from issuance of common shares, net of underwriting commissions and offering expenses of $123 and $473 in 2014 and 2013, respectively |  | 11,698 |  |  |  | 158,048 |
Proceeds from issuance of preferred shares, net of underwriting commissions and offering expenses of $412 in 2013 |  | — |  |  |  | 144,863 |
Repurchase of common shares in conjunction with equity award plans |  | (4,161 | ) |  |  | (4,060 | )
Contributions from non-controlling interests |  | 93 |  |  |  | 281 |
Distributions to non-controlling interests and redeemable operating partnership units |  | (3,982 | ) |  |  | (1,057 | )
Dividends paid |  | (179,229 | ) |  |  | (144,671 | )
Net cash flow (used for) provided by financing activities |  | (577,681 | ) |  |  | 122,941 |
Cash and cash equivalents |  |  |  |  |  |  |
Increase in cash and cash equivalents |  | 48,151 |  |  |  | 4,110 |
Effect of exchange rate changes on cash and cash equivalents |  | (495 | ) |  |  | 67 |
Cash and cash equivalents, beginning of period |  | 86,664 |  |  |  | 31,174 |
Cash and cash equivalents, end of period | $ | 134,320 |  |  | $ | 35,351 |

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE

CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.

7

DDR Corp.

Notes to Condensed Consolidated Financial Statements

1. | NATURE OF BUSINESS AND FINANCIAL STATEMENT PRESENTATION

DDR Corp. and its related real estate subsidiaries (collectively, the “Company” or “DDR”) and unconsolidated joint ventures are primarily engaged in the business of acquiring, owning, developing, redeveloping, expanding, leasing and managing shopping centers. In addition, the Company engages in the origination and acquisition of loans and debt securities, which are generally collateralized directly or indirectly by 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 Company’s 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.

Unaudited Interim Financial Statements

These financial statements have been prepared by the Company in accordance with generally accepted accounting principles for interim financial information and the applicable rules and regulations of the Securities and Exchange Commission. Accordingly, they do not include all information and footnotes required by generally accepted accounting principles for complete financial statements. However, in the opinion of management, the interim financial statements include all adjustments, consisting of only normal recurring adjustments, necessary for a fair statement of the results of the periods presented. The results of operations for the three- and nine-month periods ended September 30, 2014 and 2013, are not necessarily indicative of the results that may be expected for the full year. These condensed consolidated financial statements should be read in conjunction with the Company’s audited financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2013, as amended.

Principles of Consolidation

The condensed consolidated financial statements include the results of the Company and all entities in which the Company has a controlling interest or has been determined to be the primary beneficiary of a variable interest entity (“VIE”). All significant inter-company balances and transactions have been eliminated in consolidation. Investments in real estate joint ventures and companies in which the Company has the ability to exercise significant influence, but does not have financial or operating control, are accounted for using the equity method of accounting. Accordingly, the Company’s share of the earnings (or loss) of these joint ventures and companies is included in consolidated net income.

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):

| Nine Month Periods Ended September 30, |
| 2014 |  |  | 2013 |
Mortgages assumed from acquisitions | $ | 293.3 |  |  | $ | 148.5 |
Issuance of Operating Partnership Units ("OP Units") in connection with acquisitions |  | 18.3 |  |  |  | — |
Preferred equity interest and mezzanine loan applied to purchase price |  | 51.8 |  |  |  | — |
Elimination of the previously held equity interest in unconsolidated joint ventures acquired |  | 2.8 |  |  |  | 15.4 |
Reclassification adjustment of foreign currency translation (Note 10) |  | 21.4 |  |  |  | — |
Accounts payable related to construction in progress |  | 31.3 |  |  |  | 25.1 |
Dividends declared |  | 61.3 |  |  |  | 49.8 |
Write-off of preferred share original issuance costs |  | 1.9 |  |  |  | 5.2 |

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

8

New Accounting Standards

Revenue Recognition

In May 2014, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09 (“ASU 2014-09”), Revenue from Contracts with Customers. The objective of ASU 2014-19 is to establish a single comprehensive five-step model for entities to use in accounting for revenue arising from contracts with customers and will supersede most of the existing revenue recognition guidance, including industry-specific guidance. The core principle of ASU 2014-09 is that an entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. ASU 2014-09 applies to all contracts with customers except those that are within the scope of other topics in the FASB Accounting Standards Codification. Most significantly for the real estate industry, leasing transactions are not within the scope of the new standard. A majority of the Company’s tenant-related revenue is recognized pursuant to lease agreements. The new guidance is effective for annual reporting periods (including interim periods within those periods) beginning after December 15, 2016, for public companies. Early adoption is not permitted. Entities have the option of using either a full retrospective or modified approach to adopt ASU 2014-09. The Company is currently assessing the impact, if any, the adoption of this standard will have on its financial statements and has not decided upon the method of adoption.

Discontinued Operations

In April 2014, the FASB issued a final standard that changed the criteria for determining which disposals are presented as discontinued operations. The revised definition of a discontinued operation is “a component or group of components that has been disposed of or is classified as held for sale, together as a group in a single transaction,” and “represents a strategic shift that has (or will have) a major effect on an entity’s financial results.” The FASB agreed that a strategic shift includes “a disposal of (i) a separate major line of business, (ii) a separate major geographical area of operations, or (iii) a combination of parts of (i) or (ii) that make up a major part of an entity’s operations and financial results.” A business that, upon acquisition, qualifies as held for sale will also be a discontinued operation. The FASB also reaffirmed its decision to no longer preclude presentation of a disposal as a discontinued operation if (a) there is significant continuing involvement with a component after its disposal, or (b) there are operations and cash flows of the component that have not been eliminated from the reporting entity’s ongoing operations. The guidance may be applied prospectively to new disposals and new classifications of disposal groups classified as held for sale after the effective date. Public entities will be required to apply the standard in annual periods beginning on or after December 15, 2014, and interim periods within those annual periods. Early adoption of this standard is permitted. Beginning in 2015, the Company will apply the new guidance, as applicable, to future disposals of its shopping centers or classifications as held for sale. The Company believes that a significant portion of its ordinary course shopping center disposals will not qualify for discontinued operations presentation under this new standard upon adoption.

9

2. | INVESTMENTS IN AND ADVANCES TO JOINT VENTURES

At September 30, 2014 and December 31, 2013, the Company had ownership interests in various unconsolidated joint ventures that had an investment in 147 and 170 shopping center properties, respectively. Condensed combined financial information of the Company’s unconsolidated joint venture investments is as follows (in thousands):

| September 30, 2014 |  |  | December 31, 2013 |
Condensed Combined Balance Sheets |  |  |  |  |  |  |
Land | $ | 1,080,086 |  |  | $ | 1,275,232 |
Buildings |  | 2,917,565 |  |  |  | 3,940,806 |
Fixtures and tenant improvements |  | 168,575 |  |  |  | 266,851 |
|  | 4,166,226 |  |  |  | 5,482,889 |
Less: Accumulated depreciation |  | (814,365 | ) |  |  | (839,867 | )
|  | 3,351,861 |  |  |  | 4,643,022 |
Land held for development and construction in progress |  | 56,713 |  |  |  | 116,088 |
Real estate, net |  | 3,408,574 |  |  |  | 4,759,110 |
Cash and restricted cash |  | 95,768 |  |  |  | 282,866 |
Receivables, net |  | 68,951 |  |  |  | 101,003 |
Other assets |  | 97,959 |  |  |  | 196,615 |
| $ | 3,671,252 |  |  | $ | 5,339,594 |
Mortgage debt | $ | 2,572,521 |  |  | $ | 3,282,643 |
Notes and accrued interest payable to DDR(A) |  | 142,502 |  |  |  | 127,679 |
Other liabilities |  | 142,521 |  |  |  | 245,368 |
|  | 2,857,544 |  |  |  | 3,655,690 |
Redeemable preferred equity |  | 38,635 |  |  |  | 71,771 |
Accumulated equity |  | 775,073 |  |  |  | 1,612,133 |
| $ | 3,671,252 |  |  | $ | 5,339,594 |
Company's share of Accumulated Equity | $ | 116,711 |  |  | $ | 365,297 |

(A) | The Company had net amounts receivable from several joint ventures aggregating $4.4 million and $2.7 million at September 30, 2014 and December 31, 2013, respectively, which are included in Investments in and Advances to Joint Ventures on the condensed consolidated balance sheets. The remaining receivables on the joint ventures’ books were fully reserved by the Company in prior years.

10

| Three-Month Periods Ended September 30, |  |  | Nine-Month Periods Ended September 30, |
| 2014 |  |  | 2013 |  |  | 2014 |  |  | 2013 |
Condensed Combined Statements of Operations |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Revenues from operations | $ | 119,973 |  |  | $ | 176,001 |  |  | $ | 392,523 |  |  | $ | 527,799 |
Operating expenses |  | 40,024 |  |  |  | 61,099 |  |  |  | 137,787 |  |  |  | 182,130 |
Impairment charges |  | 11,093 |  |  |  | 13,390 |  |  |  | 11,693 |  |  |  | 51,713 |
Depreciation and amortization |  | 35,579 |  |  |  | 56,502 |  |  |  | 119,641 |  |  |  | 173,333 |
Interest expense |  | 41,764 |  |  |  | 56,453 |  |  |  | 141,776 |  |  |  | 169,935 |
Other expense, net |  | 188 |  |  |  | 1,916 |  |  |  | 3,024 |  |  |  | 2,229 |
|  | 128,648 |  |  |  | 189,360 |  |  |  | 413,921 |  |  |  | 579,340 |
Loss before tax expense and discontinued operations |  | (8,675 | ) |  |  | (13,359 | ) |  |  | (21,398 | ) |  |  | (51,541 | )
Income tax expense (primarily SSB), net |  | — |  |  |  | (6,446 | ) |  |  | (6,565 | ) |  |  | (20,299 | )
Loss from continuing operations |  | (8,675 | ) |  |  | (19,805 | ) |  |  | (27,963 | ) |  |  | (71,840 | )
Discontinued operations: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Loss from discontinued operations |  | (55 | ) |  |  | (11,196 | ) |  |  | (844 | ) |  |  | (22,604 | )
Gain (loss) on disposition of real estate, net of tax |  | 4,713 |  |  |  | (21,228 | ) |  |  | 28,224 |  |  |  | (27,133 | )
Loss before gain on disposition of real estate, net |  | (4,017 | ) |  |  | (52,229 | ) |  |  | (583 | ) |  |  | (121,577 | )
Gain on disposition of real estate, net |  | 3,833 |  |  |  | 151 |  |  |  | 3,833 |  |  |  | 794 |
Net (loss) income | $ | (184 | ) |  | $ | (52,078 | ) |  | $ | 3,250 |  |  | $ | (120,783 | )
Non-controlling interests |  | — |  |  |  | (5,800 | ) |  |  | (2,023 | ) |  |  | (19,715 | )
Net (loss) income attributable to unconsolidated joint ventures | $ | (184 | ) |  | $ | (57,878 | ) |  | $ | 1,227 |  |  | $ | (140,498 | )
Company's share of equity in net income of joint ventures | $ | 3,316 |  |  | $ | 2,800 |  |  | $ | 9,483 |  |  | $ | 4,328 |
Amortization of basis differentials(A) |  | 304 |  |  |  | 980 |  |  |  | 758 |  |  |  | 1,215 |
Equity in net income of joint ventures(B) | $ | 3,620 |  |  | $ | 3,780 |  |  | $ | 10,241 |  |  | $ | 5,543 |

(A) | Related 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.

(B) | The Company is not recording income or loss from those investments in which its investment basis is zero, as the Company does not have the obligation or intent to fund any additional capital in the joint ventures.

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

| September 30, 2014 |  |  | December 31, 2013 |
Company's share of accumulated equity | $ | 116.7 |  |  | $ | 365.3 |
Redeemable preferred equity and other(A) |  | 39.1 |  |  |  | 72.2 |
Basis differentials |  | 4.2 |  |  |  | 10.6 |
Deferred development fees, net of portion related to the Company's interest |  | (2.7 | ) |  |  | (2.8 | )
Amounts payable to DDR |  | 4.4 |  |  |  | 2.7 |
Investments in and Advances to Joint Ventures | $ | 161.7 |  |  | $ | 448.0 |

(A) | Primarily related to $38.6 million and $71.8 million in preferred equity investments in joint ventures with affiliates of The Blackstone Group L.P. (collectively, “Blackstone”) at September 30, 2014 and December 31, 2013, respectively.

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):

| Three-Month Periods Ended September 30, |  |  | Nine-Month Periods Ended September 30, |
| 2014 |  |  | 2013 |  |  | 2014 |  |  | 2013 |
Management and other fees | $ | 5.9 |  |  | $ | 7.4 |  |  | $ | 18.2 |  |  | $ | 22.6 |
Development fees and leasing commissions |  | 1.4 |  |  |  | 2.7 |  |  |  | 4.9 |  |  |  | 7.9 |
Interest income |  | 1.7 |  |  |  | 5.3 |  |  |  | 5.0 |  |  |  | 14.4 |

11

BRE DDR Retail Holdings II Joint Venture

In 2013, a joint venture between consolidated affiliates of the Company and Blackstone acquired a portfolio of seven shopping centers (“BRE DDR Retail Holdings II”), aggregating approximately 2.3 million square feet of total gross leasable area (“GLA”). In September 2014, the Company acquired Blackstone’s 95% interest in the seven assets (the “Blackstone II Acquisition”) (Note 3). The Company invested $30.0 million in preferred equity in the joint venture in 2013, all of which was repaid upon the closing of the Blackstone II Acquisition.

Sonae Sierra Brazil BV SARL (“SSB”)

On April 28, 2014, affiliates of DDR (the “Sellers”) sold to Mr. Alexander Otto (the “Investor”) and certain of his affiliates (collectively with the Investor, the “Purchasers”) 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., and an indirect interest in the Parque Dom Pedro shopping center. Sonae Sierra Brasil, S.A. owned 10 shopping centers in Brazil and is headquartered in Sao Paulo. The Company’s effective economic ownership in this investment was 33%. The Company recorded a Gain on Sale of Interests of $83.8 million in the second quarter of 2014, which included the reclassification of $19.7 million of foreign currency translation from accumulated other comprehensive income (Note 10). The weighted-average exchange rate used for recording the equity in net income into U.S. dollars was 2.26 for the Company’s ownership period, January 1, 2014 to April 28, 2014, and 2.10 for the nine-month period ended September 30, 2013.

The Investor is deemed to be a related party as a result of his common stock ownership in DDR. Furthermore, Dr. Finne, a director of DDR, is a Managing Director of certain entities affiliated with the Investor that agreed to purchase a portion of the Company’s ownership interest in SSB. The Company believes that the sales price and other terms of the transaction were negotiated on terms equivalent to those prevailing in an arms’ length transaction. The transaction was approved by a special committee of the Company’s Board of Directors, which committee included all directors except for the two board members recommended for nomination by the Investor.

Other Joint Venture Interests

For the nine months ended September 30, 2014, the Company’s unconsolidated joint ventures sold eight assets and received aggregate proceeds of $106.1 million, of which $21.1 million was the Company’s proportionate share. For the 2014 disposition activity, the joint ventures recorded an aggregate gain of $32.1 million, of which $7.7 million was the Company’s proportionate share.

3. | ACQUISITIONS

In the nine-month period ended September 30, 2014, the Company acquired the following shopping centers (in millions):

Location or Transaction |  | Date Acquired |  | Gross Purchase Price |  |  | Face Value of Mortgage Debt Assumed |
Colorado Springs, Colorado |  | April 2014 |  | $ | 29.4 |  |  | $ | 12.9 |
Roseville, California |  | May 2014 |  |  | 89.5 |  |  |  | — |
Cincinnati, Ohio |  | May 2014 |  |  | 29.5 |  |  |  | — |
Chicago, Illinois |  | June 2014 |  |  | 98.0 |  |  |  | 35.5 |
Philadelphia, Pennsylvania |  | August 2014 |  |  | 31.5 |  |  |  | — |
Blackstone II Acquisition |  | September 2014 |  |  | 395.3 |  |  |  | 233.3 |
|  |  |  | $ | 673.2 |  |  | $ | 281.7 |

12

The Company accounted for the acquisitions utilizing the purchase method of accounting. The fair value of acquisitions was allocated as follows (in thousands):

|  |  |  |  | Weighted Average Amortization Period (in Years)
Land | $ | 144,587 |  |  | N/A
Buildings |  | 386,889 |  |  | (B)
Tenant improvements |  | 9,205 |  |  | (B)
Construction in progress |  | 76,213 |  |  | N/A
In-place leases (including lease origination costs and fair market value of leases)(A) |  | 58,092 |  |  | 7.2
Tenant relations |  | 34,424 |  |  | 7.6
Other assets |  | 4,402 |  |  | N/A
|  | 713,812 |  |  |
Less: Mortgage debt assumed at fair value |  | (293,288 | ) |  | N/A
Less: Below-market leases |  | (25,017 | ) |  | 19.1
Less: Other liabilities |  | (3,403 | ) |  |
Net assets acquired | $ | 392,104 |  |  |

(A) | Includes above-market value of leases of $8.8 million.

(B) | Depreciated in accordance with the Company’s policy.

Consideration: |  |  |
Cash | $ | 315,329 |
Repayment of preferred equity interest and mezzanine loan |  | 51,775 |
Issuance of OP Units |  | 18,256 |
Gain on Sale and Change in Control of Interests |  | 3,977 |
Fair value of previously held equity interest |  | 2,767 |
Total consideration | $ | 392,104 |

The Company incurred $2.1 million of costs related to the acquisition of these assets. These costs were expensed as incurred and included in other income (expense), net. Included in the Company’s condensed consolidated statements of operations are $7.7 million and $13.9 million in total revenues from the date of acquisition through September 30, 2014 and 2013, respectively.

Blackstone II Acquisition

In September 2014, the Company acquired sole ownership of a portfolio of seven power centers through the Blackstone II Acquisition. The transaction was valued at $395.3 million at 100%. In connection with the closing, the Company assumed Blackstone’s 95% share of $233.3 million of mortgage debt, at face value, of which $28.0 million was repaid upon closing. In addition, $31.2 million of preferred equity interest previously funded by the Company was repaid upon closing and the remaining was paid in cash. The Company accounted for this transaction as a step acquisition. Due to the change in control that occurred, the Company recorded a Gain on Sale and Change in Control of $4.0 million related to the difference between the Company’s carrying value and fair value of the previously held equity interest.

13

Pro Forma Information

The following unaudited supplemental pro forma operating data is presented for the three- and nine-month periods ended September 30, 2014 and 2013, as if the acquisition of the interests in the properties acquired in 2014 and 2013 was completed on January 1, 2013 (in thousands, except per share amounts). The Gain on Change in Control related to the acquisitions from unconsolidated joint ventures was adjusted to the assumed acquisition date. 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.

| Three-Month Periods Ended September 30, |  |  | Nine-Month Periods Ended September 30, |
| 2014 |  |  | 2013 |  |  | 2014 |  |  | 2013 |
Pro forma revenues | $ | 259,611 |  |  | $ | 253,726 |  |  | $ | 777,301 |  |  | $ | 757,434 |
Pro forma (loss) income from continuing operations | $ | (452 | ) |  | $ | (22,938 | ) |  | $ | 41,469 |  |  | $ | (57,111 | )
Pro forma net income (loss) attributable to DDR common shareholders | $ | 56,247 |  |  | $ | (31,045 | ) |  | $ | 95,393 |  |  | $ | (111,551 | )
Basic earnings per share data: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Net income (loss) attributable to DDR common shareholders | $ | 0.16 |  |  | $ | (0.09 | ) |  | $ | 0.26 |  |  | $ | (0.31 | )
Diluted earnings per share data: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Net income (loss) attributable to DDR common shareholders | $ | 0.16 |  |  | $ | (0.09 | ) |  | $ | 0.26 |  |  | $ | (0.31 | )

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 consisted of the following (in thousands):

| September 30, 2014 |  |  | December 31, 2013 |
Loans receivable | $ | 52,820 |  |  | $ | 72,218 |
Other notes |  | 1,016 |  |  |  | 1,034 |
Tax Increment Financing Bonds ("TIF Bonds")(A) |  | 3,809 |  |  |  | 5,086 |
| $ | 57,645 |  |  | $ | 78,338 |

(A) | 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 September 30, 2014 and December 31, 2013, the Company had six and seven loans receivable outstanding, respectively. The following table reconciles the loans receivable on real estate for the nine-month periods ended September 30, 2014 and 2013 (in thousands):

| 2014 |  |  | 2013 |
Balance at January 1 | $ | 72,218 |  |  | $ | 60,378 |
Additions: |  |  |  |  |  |  |
New mortgage loans |  | — |  |  |  | 21,967 |
Interest |  | 810 |  |  |  | 319 |
Accretion of discount |  | 689 |  |  |  | 651 |
Deductions: |  |  |  |  |  |  |
Payments of principal and interest |  | (347 | ) |  |  | (11,670 | )
Other(A) |  | (20,550 | ) |  |  | — |
Balance at September 30 | $ | 52,820 |  |  | $ | 71,645 |

(A) | Loan applied toward the purchase price of the asset acquired in Chicago, Illinois (Note 3).

At September 30, 2014, the Company had one loan outstanding aggregating $9.8 million that matured, was more than 90 days past due and partially reserved and one loan that was fully reserved. No other loans outstanding are past due. The Company is no longer accruing interest income on these notes as no payments have been received.

14

5. | OTHER ASSETS, NET

Other assets consist of the following (in thousands):

| September 30, 2014 |  |  | December 31, 2013 |
Intangible assets: |  |  |  |  |  |  |
In-place leases, net | $ | 175,340 |  |  | $ | 159,357 |
Above-market rent, net |  | 62,355 |  |  |  | 59,211 |
Tenant relations, net |  | 190,406 |  |  |  | 191,045 |
Total intangible assets, net(A) |  | 428,101 |  |  |  | 409,613 |
Other assets: |  |  |  |  |  |  |
Accounts receivable, net(B) |  | 128,414 |  |  |  | 129,513 |
Deferred charges, net |  | 30,124 |  |  |  | 38,124 |
Prepaid expenses |  | 23,162 |  |  |  | 14,082 |
Other assets |  | 42,273 |  |  |  | 45,403 |
Deposits |  | 8,120 |  |  |  | 8,770 |
Total other assets, net | $ | 660,194 |  |  | $ | 645,505 |

(A) | The Company recorded amortization expense related to its intangibles, excluding above- and below-market leases, of $25.2 million and $8.6 million for the three-month periods ended September 30, 2014 and 2013, respectively, and $79.1 million and $22.4 million for the nine-month periods ended September 30, 2014 and 2013, respectively.

(B) | Includes straight-line rents receivable, net, of $62.7 million and $61.9 million at September 30, 2014 and December 31, 2013, respectively.

6. | REVOLVING CREDIT FACILITIES AND TERM LOANS

The following table discloses certain information regarding the Company’s Revolving Credit Facilities (as defined below) and term loans (in millions):

|  | Carrying Value at September 30, 2014 |  |  | Weighted-Average Interest Rate at September 30, 2014 |  |  | Maturity Date
Unsecured indebtedness: |  |  |  |  |  |  |  |  |  |
Unsecured Credit Facility |  | $ | 23.5 |  |  |  | 2.4 | % |  | April 2017
PNC Facility |  |  | — |  |  | N/A |  |  | April 2017
Unsecured term loan – Tranche 1 |  |  | 50.0 |  |  |  | 2.1 | % |  | January 2017
Unsecured term loan – Tranche 2 |  |  | 300.0 |  |  |  | 3.2 | % |  | January 2019
Secured indebtedness: |  |  |  |  |  |  |  |  |  |
Secured term loan |  |  | 400.0 |  |  |  | 1.6 | % |  | April 2017

Revolving Credit Facilities

The Company maintains an unsecured revolving credit facility with a syndicate of financial institutions, arranged by J.P. Morgan Securities, LLC and Wells Fargo Securities, LLC (the “Unsecured Credit Facility”). 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 up 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 and the ability to extend the maturity for one year to April 2018, at the Company’s option. 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 20 basis points on the entire facility at September 30, 2014. The Unsecured Credit Facility also allows for foreign currency-denominated borrowings. At September 30, 2014, the outstanding balance consisted solely of Canadian dollar-denominated borrowings (Note 7).

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”). The PNC Facility reflects terms consistent with those contained in the Unsecured Credit Facility.

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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 (0.15% at September 30, 2014), as defined in the respective facility, or (ii) LIBOR, plus a specified spread (1.15% at September 30, 2014). The specified spreads vary depending on the Company’s long-term senior unsecured debt rating from Moody’s Investors Service and Standard and Poor’s. The Company is required to comply with certain covenants under the Revolving Credit Facilities relating to total outstanding indebtedness, secured indebtedness, maintenance of unencumbered real estate assets and fixed charge coverage. The covenants also require that the Company cannot exceed a total dividend payout ratio of 95% of the Company’s pro rata share of Funds From Operations (as defined in the agreements governing the Revolving Credit Facilities) for the prior twelve-month period unless required to maintain Real Estate Investment Trust (“REIT”) status. The Company was in compliance with these covenants at September 30, 2014.

7. | FINANCIAL INSTRUMENTS

Measurement of Fair Value

At September 30, 2014, the Company used pay-fixed interest rate swaps to manage its exposure to changes in benchmark interest rates (the “Swaps”). The estimated fair values were determined using the market standard methodology of netting the discounted fixed cash payments and the discounted expected variable cash receipts. The variable cash receipts are based on an expectation of interest rates (forward curves) derived from observable market interest rate curves. In addition, credit valuation adjustments, which consider the impact of any credit enhancements to the contracts, are incorporated in the fair values to account for potential non-performance risk, including the Company’s own non-performance risk and the respective counterparty’s non-performance risk. 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 Company maintains interest rate swap agreements (included in Other Assets and Other Liabilities) and marketable securities (included in Other Assets), which include investments in the Company’s elective deferred compensation plan and investments in securities measured at fair value on a recurring basis as of September 30, 2014 and December 31, 2013. The following table presents information about the Company’s financial assets and liabilities 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 |
September 30, 2014 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Derivative Financial Instruments |  | $ | — |  |  | $ | (2.7 | ) |  | $ | — |  |  | $ | (2.7 | )
Marketable Securities |  | $ | 5.0 |  |  | $ | — |  |  | $ | — |  |  | $ | 5.0 |
December 31, 2013 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Derivative Financial Instruments |  | $ | — |  |  | $ | (3.2 | ) |  | $ | — |  |  | $ | (3.2 | )
Marketable Securities |  | $ | 7.4 |  |  | $ | — |  |  | $ | — |  |  | $ | 7.4 |

The unrealized gain of $0.5 million included in other comprehensive income (loss) (“OCI”) is attributable to the net change in fair value during the nine-month period ended September 30, 2014, related to derivative financial instruments, none of which were reported in the Company’s condensed consolidated statements of operations because the Swaps are documented and qualify as hedging instruments.

Other Fair Value Instruments

Investments in unconsolidated joint ventures are considered financial assets. See discussion of related fair value considerations in Note 12.

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

The carrying amounts reported in the consolidated balance sheets for these financial instruments approximated fair value because of their short-term maturities. The Company’s marketable equity securities have been classified as available-for-sale and are recorded at fair value.

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Notes Receivable and Advances to Affiliates

The fair value is estimated using a discounted cash flow analysis, in which the Company used unobservable inputs such as market interest rates determined by the loan to value and market capitalization rates related to the underlying collateral at which management believes similar loans would be made and classified as Level 3 in the fair value hierarchy. The fair value of these notes was approximately $95.7 million and $148.2 million at September 30, 2014 and December 31, 2013, respectively, as compared to the carrying amounts of $92.9 million and $145.5 million, respectively. The carrying value of the TIF bonds, which was $3.8 million and $5.1 million at September 30, 2014 and December 31, 2013, respectively, approximated their fair value as of both dates.

Debt

The fair market value of senior notes, except senior convertible notes, is determined using the trading price of the Company’s public debt. The fair market value for all other debt is estimated using a discounted cash flow technique that incorporates future contractual interest and principal payments and a market interest yield curve with adjustments for duration, optionality and risk profile including the Company’s non-performance risk and loan to value. The Company’s senior notes, except senior convertible notes, and all other debt including senior convertible notes are classified as Level 2 and Level 3, respectively, in the fair value hierarchy.

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 September 30, 2014 and December 31, 2013, with carrying values that are different than estimated fair values, are summarized as follows (in thousands):

| September 30, 2014 |  |  | December 31, 2013 |
| Carrying Amount |  |  | Fair Value |  |  | Carrying Amount |  |  | Fair Value |
Senior Notes | $ | 2,762,893 |  |  | $ | 3,000,255 |  |  | $ | 2,754,120 |  |  | $ | 2,991,698 |
Revolving Credit Facilities and term loans |  | 773,457 |  |  |  | 781,530 |  |  |  | 779,133 |  |  |  | 787,772 |
Mortgage indebtedness |  | 1,699,694 |  |  |  | 1,730,030 |  |  |  | 1,761,421 |  |  |  | 1,779,375 |
| $ | 5,236,044 |  |  | $ | 5,511,815 |  |  | $ | 5,294,674 |  |  | $ | 5,558,845 |

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, through 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 interests in consolidated joint ventures that own real estate assets in Canada. 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 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 Swaps as part of its interest rate risk management strategy. The 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.

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As of September 30, 2014 and December 31, 2013, the notional amount of the Swaps was $530.4 million and $631.4 million, respectively. The following table discloses certain information regarding the Company’s Swaps (nine at September 30, 2014), not including the specified spreads, as well as their classification on the condensed consolidated balance sheets, as of September 30, 2014 and December 31, 2013 (in millions):

|  | Aggregate |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|  | Notional |  |  | Counterparty |  | DDR Pays |  |  | Fair Value |
|  | Amount at |  |  | Pays Variable |  | Fixed |  |  | September 30, 2014 |  |  | December 31, 2013 |
Maturity Date |  | September 30, 2014 |  |  | Rate |  | Rate |  |  | Asset |  |  | Liability |  |  | Asset |  |  | Liability |
June 2014 |  | N/A |  |  | 1 Month LIBOR |  |  | 1.0 | % |  | N/A |  |  | N/A |  |  | $ | — |  |  | $ | (0.4 | )
June 2015 |  | $ | 50.0 |  |  | 1 Month LIBOR |  |  | 0.6 | % |  | $ | — |  |  | $ | (0.1 | ) |  |  | — |  |  |  | (0.2 | )
July 2015 |  | $ | 100.0 |  |  | 1 Month LIBOR |  |  | 0.5 | % |  |  | — |  |  |  | (0.3 | ) |  |  | — |  |  |  | (0.4 | )
September 2017 |  | $ | 80.4 |  |  | 1 Month LIBOR |  |  | 2.8 | % |  |  | — |  |  |  | (3.9 | ) |  |  | — |  |  |  | (5.0 | )
January 2018 |  | $ | 100.0 |  |  | 1 Month LIBOR |  |  | 0.9 | % |  |  | 1.2 |  |  |  | — |  |  |  | 1.4 |  |  |  | — |
February 2019 |  | $ | 100.0 |  |  | 1 Month LIBOR |  |  | 1.6 | % |  |  | — |  |  |  | — |  |  |  | 0.5 |  |  |  | — |
February 2019 |  | $ | 100.0 |  |  | 1 Month LIBOR |  |  | 1.5 | % |  |  | 0.4 |  |  |  | — |  |  |  | 0.9 |  |  |  | — |
Other Assets |  |  |  |  |  |  |  |  |  |  |  | $ | 1.6 |  |  | N/A |  |  | $ | 2.8 |  |  | N/A |
Accounts Payable |  |  |  |  |  |  |  |  |  |  |  | N/A |  |  | $ | (4.3 | ) |  | N/A |  |  | $ | (6.0 | )

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 $5.9 million, which includes amortization of previously settled interest rate contracts.

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 2014, such derivatives were used to hedge the forecasted variable cash flows associated with existing or probable future obligations. The ineffective portion of the change in the fair value of derivatives is recognized directly in earnings. During the nine-month periods ended September 30, 2014 and 2013, the amount of hedge ineffectiveness recorded was not material.

The Company is exposed to credit risk in the event of non-performance by the counterparties to the Swaps if the derivative position has a positive balance. 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 entered, 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 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 is not material. The Company repaid all of its Euro-denominated borrowings at September 30, 2014 (Note 6).

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Effect on Net Income (Loss) and OCI

The effect of the Company’s cash flow hedges and net investment hedge instruments on net income (loss) and OCI is as follows (in millions):

| Amount of Gain (Loss) Recognized in OCI (Effective Portion) |  |  | Location of Gain (Loss) Reclassified from |  | Amount of Gain (Loss) Reclassified from Accumulated OCI (Effective Portion) |
| Three-Month Periods Ended |  |  | Nine-Month Periods Ended |  |  | Accumulated OCI |  | Three-Month Periods Ended |  |  | Nine-Month Periods Ended |
| September 30, |  |  | September 30, |  |  | (Effective |  | September 30, |  |  | September 30, |
| 2014 |  |  | 2013 |  |  | 2014 |  |  | 2013 |  |  | Portion) |  | 2014 |  |  | 2013 |  |  | 2014 |  |  | 2013 |
Cash flow hedges: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Interest rate contracts | $ | 3.0 |  |  | $ | (1.5 | ) |  | $ | 0.5 |  |  | $ | 11.1 |  |  | Interest Expense |  | $ | (0.1 | ) |  | $ | (0.1 | ) |  | $ | (0.3 | ) |  | $ | (0.3 | )
Net investment hedges: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Euro-denominated | $ | 0.2 |  |  | $ | (0.2 | ) |  | $ | 0.3 |  |  | $ | (0.1 | ) |  |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |
Canadian dollar-denominated |  | 1.1 |  |  |  | (0.5 | ) |  |  | 1.0 |  |  |  | 0.8 |  |  |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Total | $ | 1.3 |  |  | $ | (0.7 | ) |  | $ | 1.3 |  |  | $ | 0.7 |  |  |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |

8. | COMMITMENTS AND CONTINGENCIES

Legal Matters

Coventry II

The Company is a party to various joint ventures with the Coventry II Fund, through which 10 existing or proposed retail properties, along with a portfolio of former Service Merchandise locations, were acquired at various times from 2003 through 2006. The Company was generally responsible for day-to-day management of the properties through December 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 contained allegations including breach of contract, breach of fiduciary duty, fraudulent inducement, misrepresentation, and economic duress. The complaint sought compensatory, consequential and punitive damages.

In response to this action, the Company filed a motion to dismiss the complaint. In June 2010, the court granted the motion in part (which was affirmed on appeal), dismissing Coventry’s claim that the Company breached a fiduciary duty owed to Coventry. The Company also filed an answer to the complaint, and 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. On April 18, 2013, the court issued an order dismissing most of Coventry’s remaining claims against the Company. The court’s decision denied the Company’s motion solely with respect to several claims for breach of contract under the Company’s prior management agreements in connection with certain assets. Coventry appealed the court’s ruling dismissing its claims. On June 14, 2014, the appellate court issued an opinion affirming the dismissal of most of Coventry’s remaining claims.

On October 10, 2014, the Company and Coventry entered into a settlement agreement. The agreement, which is subject to various contingencies, provides for mutual releases of all claims and for the dismissal of the pending litigation. The Company does not expect the settlement to have a material adverse effect on the Company’s financial condition, results of operations or cash flows.

Contract Termination

In January 2008, the Company entered into a Services Agreement (the “Agreement”) with Oxford Building Services, Inc. (“Oxford”), whose obligations were guaranteed by certain affiliates of Oxford. The Agreement required that Oxford identify and contract directly with various service providers (“Vendors”) to provide maintenance, repairs, supplies and a variety of on-site services to certain properties in the Company’s portfolio, in exchange for which Oxford would pay such Vendors for the services. Under the Agreement, the Company remitted funds to Oxford to pay the Vendors under the Vendors’ contracts with Oxford.

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On or about January 23, 2013, Oxford advised the Company that Oxford had misapplied approximately $11 million paid by the Company to Oxford and, as a result, Oxford had insufficient funds to pay the Vendors in accordance with the Agreement. On January 28, 2013, the Company terminated the Agreement based upon Oxford’s violations of the Agreement, principally due to its insolvency. Oxford and several affiliates subsequently filed bankruptcy petitions in the United States Bankruptcy Court for the District of New Jersey and are in liquidation under Chapter 7 of the United States Bankruptcy Code.

In its initial filings in the bankruptcy case, Oxford had threatened litigation alleging certain claims against the Company which the Company vigorously denied; however, to date, no such claims have been asserted by Oxford against the Company. On March 18, 2013, the Company filed suit in the Court of Common Pleas, Cuyahoga County, Ohio, which was subsequently removed to the federal district court in Cleveland, Ohio, against certain affiliates and the individual principals of Oxford asserting claims for, among other things, breach of guaranty, fraud, conversion and civil conspiracy.

In July 2014, the Company and the defendants in the Ohio litigation reached an agreement to settle all claims asserted in the Ohio litigation.

Other

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.

9. | EQUITY

Common Shares

In the third quarter of 2014, the Company issued 0.7 million common shares at a weighted-average price of $17.81 per share, generating net proceeds of $11.8 million. The net proceeds primarily were used to acquire shopping center assets (Note 3).

Common share dividends declared per share were as follows:

|  | Three-Month Periods Ended September 30, |  |  | Nine-Month Periods Ended September 30, |
|  | 2014 |  |  | 2013 |  |  | 2014 |  |  | 2013 |
Common share dividends declared per share |  | $ | 0.155 |  |  | $ | 0.135 |  |  | $ | 0.465 |  |  | $ | 0.405 |

Preferred Shares

In May 2014, the Company redeemed the remaining $55.0 million of its Class H cumulative redeemable preferred shares (“Class H Preferred Shares”) at a redemption price of $504.6094 per Class H Preferred Share (the sum of $500.00 per Class H Preferred Share and dividends per Class H Preferred Share of $4.6094 prorated to the redemption date of May 30, 2014) or $25.2305 per depositary share (the sum of $25.00 per depositary share and dividends per depositary share of $0.2305 prorated to the redemption date of May 30, 2014). The Company recorded a charge of $1.9 million in the second quarter of 2014 related to the write-off of the Class H Preferred Shares’ original issuance costs.

Non-Controlling Interests

In June 2014, the Company issued 1.0 million OP Units in conjunction with the purchase of an asset in Chicago, Illinois (Note 3).

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10. | OTHER COMPREHENSIVE LOSS

The changes in Accumulated Other Comprehensive Loss by component are as follows (in thousands):

| Gains and Losses on Cash Flow Hedges |  |  | Foreign Currency Items |  |  | Net Unrealized Gains on Marketable Securities |  |  | Total |
Balance, December 31, 2013 | $ | (7,912 | ) |  | $ | (30,624 | ) |  | $ | 2,043 |  |  | $ | (36,493 | )
Other comprehensive income (loss) before reclassifications |  | 535 |  |  |  | 7,288 |  |  |  | (649 | ) |  |  | 7,174 |
Reclassification adjustment for foreign currency translation(A) |  | — |  |  |  | 21,360 |  |  |  | — |  |  |  | 21,360 |
Reclassification adjustment for realized gains on available-for-sale securities(B) |  | — |  |  |  | — |  |  |  | (840 | ) |  |  | (840 | )
Amounts reclassified from accumulated other comprehensive loss(C) |  | 354 |  |  |  | — |  |  |  | — |  |  |  | 354 |
Net current-period other comprehensive income (loss) |  | 889 |  |  |  | 28,648 |  |  |  | (1,489 | ) |  |  | 28,048 |
Balance, September 30, 2014 | $ | (7,023 | ) |  | $ | (1,976 | ) |  | $ | 554 |  |  | $ | (8,445 | )

(A) | Includes a gain of $19.7 million related to the Company’s sale of its interest in the SSB joint venture (Note 2) classified as Gain on Sale and Change in Control of Interests in the Company’s condensed consolidated statement of operations for the nine-month period ended September 30, 2014, which was previously recognized in Accumulated Other Comprehensive Loss. Also, includes a gain of $1.7 million related to the Company’s substantial liquidation of its investment in Russia, classified on the Gain on Sale as well as Non-Controlling Interests lines in the Company’s condensed consolidated statement of operations for the three- and nine-month periods ended September 30, 2014, which was previously recognized in Accumulated Other Comprehensive Loss.

(B) | Realized gains are included in the condensed consolidated statement of operations within Fee and Other Income for the nine months ended September 30, 2014.

(C) | Reflects amortization classified in Interest Expense of $0.4 million, partially offset by amortization classified in Equity in Net Income of Joint Ventures of $0.1 million, in the Company’s condensed consolidated statement of operations for the nine months ended September 30, 2014, which was previously recognized in Accumulated Other Comprehensive Loss.

11. | FEE AND OTHER INCOME

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

| Three-Month Periods Ended September 30, |  |  | Nine-Month Periods Ended September 30, |
| 2014 |  |  | 2013 |  |  | 2014 |  |  | 2013 |
Management, development and other fee income | $ | 7.6 |  |  | $ | 10.3 |  |  | $ | 23.7 |  |  | $ | 31.2 |
Ancillary and other property income |  | 6.5 |  |  |  | 7.8 |  |  |  | 18.8 |  |  |  | 20.7 |
Lease termination fees |  | 0.7 |  |  |  | 1.0 |  |  |  | 4.1 |  |  |  | 6.2 |
Other |  | 0.2 |  |  |  | 0.1 |  |  |  | 1.3 |  |  |  | 0.4 |
Total fee and other income | $ | 15.0 |  |  | $ | 19.2 |  |  | $ | 47.9 |  |  | $ | 58.5 |

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12. | IMPAIRMENT CHARGES AND IMPAIRMENT OF JOINT VENTURE INVESTMENTS

The Company recorded impairment charges during the three- and nine-month periods ended September 30, 2014 and 2013, based on the difference between the carrying value of the assets or investments and the estimated fair market value as follows (in millions):

| Three-Month Periods Ended September 30, |  |  | Nine-Month Periods Ended September 30, |
| 2014 |  |  | 2013 |  |  | 2014 |  |  | 2013 |
Land held for development(A) | $ | — |  |  | $ | — |  |  | $ | 13.2 |  |  | $ | — |
Undeveloped land |  | 1.4 |  |  |  | — |  |  |  | 1.9 |  |  |  | 2.6 |
Assets marketed for sale(B) |  | 0.4 |  |  |  | 9.2 |  |  |  | 3.8 |  |  |  | 20.3 |
Total continuing operations | $ | 1.8 |  |  | $ | 9.2 |  |  | $ | 18.9 |  |  | $ | 22.9 |
Sold assets – discontinued operations |  | — |  |  |  | 14.9 |  |  |  | 8.1 |  |  |  | 43.9 |
Joint venture investments(C) |  | — |  |  |  | — |  |  |  | 9.1 |  |  |  | — |
Total impairment charges | $ | 1.8 |  |  | $ | 24.1 |  |  | $ | 36.1 |  |  | $ | 66.8 |

(A) | Amounts reported in the nine-month period ended September 30, 2014, primarily related to land held for development in Canada that is owned through a consolidated joint venture. The asset impairment was triggered primarily by the Company’s decision to sell the land.

(B) | The impairment 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 one or more potential transactions.

(C) | Amount recorded in 2014 represents an “other than temporary impairment” charge on a development project in Canada that is owned through an unconsolidated joint venture. The impairment was triggered by changes in the timing of the project development assumptions that occurred in the first quarter of 2014.

Items Measured at Fair Value on a Non-Recurring Basis

For a description of the Company’s methodology on determining fair value, refer to Note 12 of the Company’s Financial Statements filed on its Annual Report on Form 10-K for the year ended December 31, 2013, as amended.

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 nine-month period ended September 30, 2014, and the year ended December 31, 2013. 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 |
September 30, 2014 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Long-lived assets held and used |  | $ | — |  |  | $ | — |  |  | $ | 111.6 |  |  | $ | 111.6 |  |  | $ | 27.0 |
Unconsolidated joint venture investments |  |  | — |  |  |  | — |  |  |  | 26.8 |  |  |  | 26.8 |  |  |  | 9.1 |
December 31, 2013 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Long-lived assets held and used and held for sale |  |  | — |  |  |  | — |  |  |  | 164.2 |  |  |  | 164.2 |  |  |  | 72.6 |
Unconsolidated joint venture investments |  |  | — |  |  |  | — |  |  |  | 35.3 |  |  |  | 35.3 |  |  |  | 1.0 |

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The following table presents quantitative information about the significant unobservable inputs used by the Company to determine the fair value of non-recurring items (in millions):

|  | Quantitative Information about Level 3 Fair Value Measurements |
|  | Fair Value at |  |  |  |  |  |  | Range |
Description |  | September 30, 2014 |  |  | December 31, 2013 |  |  | Valuation Technique |  | Unobservable Inputs |  | 2014 |  |  | 2013 |
Impairment of consolidated assets |  | $ | 44.6 |  |  | $ | 88.7 |  |  | Indicative Bid(A)/ Contracted Price |  | Indicative Bid(A)/ Contracted Price |  | N/A |  |  | N/A |
|  |  | 67.0 |  |  |  | 75.5 |  |  | Income Capitalization Approach(B) |  | Market Capitalization Rate |  |  | 8% |  |  | 8% – 10% |
|  |  |  |  |  |  |  |  |  |  |  | Price Per Square Foot |  | N/A |  |  | $12 – $117 |
Impairment of joint venture investments |  |  | 26.8 |  |  |  | 35.3 |  |  | Discounted Cash Flow |  | Discount Rate |  | 8% – 15% |  |  | 8% – 15% |
|  |  |  |  |  |  |  |  |  |  |  | Terminal Capitalization Rate |  |  | 6% |  |  |  | 6% |

(A) | Fair value measurements based upon indicative bids were developed by third-party sources (including offers and comparable sales values), subject to the Company’s determination of reasonableness. The Company does not have access to certain unobservable inputs used by these third parties to determine these estimated fair values.

(B) | Vacant space in certain assets was valued based on a price per square foot.

13. | DISCONTINUED OPERATIONS

The Company sold 23 properties (including two properties held for sale at December 31, 2013) during the nine-month period ended September 30, 2014. In addition, the Company sold 39 properties in 2013. These asset sales are included in discontinued operations for the three- and nine-month periods ended September 30, 2014 and 2013. The operating results related to assets sold as of September 30, 2014, are as follows (in thousands):

| Three-Month Periods Ended September 30, |  |  | Nine-Month Periods Ended September 30, |
| 2014 |  |  | 2013 |  |  | 2014 |  |  | 2013 |
Revenues | $ | 5,596 |  |  | $ | 15,136 |  |  | $ | 21,185 |  |  | $ | 50,853 |
Operating expenses |  | 1,164 |  |  |  | 4,031 |  |  |  | 5,220 |  |  |  | 14,285 |
Impairment charges |  | — |  |  |  | 14,875 |  |  |  | 8,098 |  |  |  | 43,893 |
Interest, net |  | 1,328 |  |  |  | 3,609 |  |  |  | 5,374 |  |  |  | 12,254 |
Depreciation and amortization |  | 2,303 |  |  |  | 4,580 |  |  |  | 8,083 |  |  |  | 15,533 |
|  | 4,795 |  |  |  | 27,095 |  |  |  | 26,775 |  |  |  | 85,965 |
Income (loss) from discontinued operations |  | 801 |  |  |  | (11,959 | ) |  |  | (5,590 | ) |  |  | (35,112 | )
Gain on disposition of real estate, net of tax |  | 57,105 |  |  |  | 8,701 |  |  |  | 74,287 |  |  |  | 7,240 |
Income (loss) from discontinued operations | $ | 57,906 |  |  | $ | (3,258 | ) |  | $ | 68,697 |  |  | $ | (27,872 | )

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14. | EARNINGS PER SHARE

The following table calculates the Company’s earnings per share (“EPS”) and provides a reconciliation of net income 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):

| Three-Month Periods Ended September 30, |  |  | Nine-Month Periods Ended September 30, |
| 2014 |  |  | 2013 |  |  | 2014 |  |  | 2013 |
Numerators – Basic and Diluted: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Continuing Operations: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Income from continuing operations | $ | 6,313 |  |  | $ | 1,124 |  |  | $ | 53,655 |  |  | $ | 10,696 |
Plus: Gain on disposition of real estate |  | 2,262 |  |  |  | 1,929 |  |  |  | 2,645 |  |  |  | 347 |
Plus: Income (loss) attributable to non-controlling interests |  | 2,125 |  |  |  | (136 | ) |  |  | 1,623 |  |  |  | (443 | )
Write-off of preferred share original issuance costs |  | — |  |  |  | — |  |  |  | (1,943 | ) |  |  | (5,246 | )
Preferred dividends |  | (5,594 | ) |  |  | (6,608 | ) |  |  | (18,460 | ) |  |  | (21,113 | )
Less: Earnings attributable to unvested shares and operating partnership units |  | (463 | ) |  |  | (330 | ) |  |  | (1,238 | ) |  |  | (1,052 | )
Income (loss) from continuing operations |  | 4,643 |  |  |  | (4,021 | ) |  |  | 36,282 |  |  |  | (16,811 | )
Discontinued Operations: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Income (loss) from discontinued operations |  | 57,906 |  |  |  | (3,258 | ) |  |  | 68,697 |  |  |  | (27,872 | )
Plus: (Loss) income attributable to non-controlling interests |  | — |  |  |  | (34 | ) |  |  | 1,362 |  |  |  | (113 | )
Net income (loss) attributable to DDR common shareholders after allocation to participating securities | $ | 62,549 |  |  | $ | (7,313 | ) |  | $ | 106,341 |  |  | $ | (44,796 | )
Denominators – Number of Shares: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Basic—Average shares outstanding |  | 358,025 |  |  |  | 318,184 |  |  |  | 357,824 |  |  |  | 316,146 |
Effect of dilutive securities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Stock options |  | 487 |  |  |  | — |  |  |  | 468 |  |  |  | — |
Diluted—Average shares outstanding |  | 358,512 |  |  |  | 318,184 |  |  |  | 358,292 |  |  |  | 316,146 |
Basic Earnings Per Share: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Income (loss) from continuing operations attributable to DDR common shareholders | $ | 0.01 |  |  | $ | (0.01 | ) |  | $ | 0.10 |  |  | $ | (0.05 | )
Income (loss) from discontinued operations attributable to DDR common shareholders |  | 0.16 |  |  |  | (0.01 | ) |  |  | 0.20 |  |  |  | (0.09 | )
Net income (loss) attributable to DDR common shareholders | $ | 0.17 |  |  | $ | (0.02 | ) |  | $ | 0.30 |  |  | $ | (0.14 | )
Diluted Earnings Per Share: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Income (loss) from continuing operations attributable to DDR common shareholders | $ | 0.01 |  |  | $ | (0.01 | ) |  | $ | 0.10 |  |  | $ | (0.05 | )
Income (loss) from discontinued operations attributable to DDR common shareholders |  | 0.16 |  |  |  | (0.01 | ) |  |  | 0.20 |  |  |  | (0.09 | )
Net income (loss) attributable to DDR common shareholders | $ | 0.17 |  |  | $ | (0.02 | ) |  | $ | 0.30 |  |  | $ | (0.14 | )

The following potentially dilutive securities are considered in the calculation of EPS as described below:

Potentially Dilutive Securities:

— | The Company’s senior convertible notes due 2040, which are convertible into common shares of the Company with a conversion price of $14.96 at September 30, 2014, were not included in the computation of diluted EPS for all periods presented because the Company’s common share price did not exceed 125% of the conversion price in these periods and would therefore be anti-dilutive.

— | Shares subject to issuance under the Company’s 2013 Value Sharing Equity Program were not considered in the computation of diluted EPS for the three- and nine-month periods ended September 30, 2014, because the calculation was anti-dilutive.

— | At September 30, 2014 and 2013, the Company had 1,441,890 and 398,701 OP Units, respectively, outstanding. The exchange into common shares associated with the OP Units was not included in the computation of diluted shares outstanding for all periods presented because the effect of assuming conversion was anti-dilutive.

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15. | SEGMENT INFORMATION

At September 30, 2014, the Company has two reportable operating segments, shopping centers and loan investments. Each consolidated shopping center is considered a separate operating segment; 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. Effective April 1, 2014, the Company’s equity method investment in the Brazil equity investment is no longer considered a reportable segment due to the Company’s sale of its entire ownership interest in SSB (Note 2). The operating segment information for the three- and nine-month periods ended September 30, 2013, has been restated to conform to the current presentation.

The tables below present information about the Company’s reportable operating segments and reflect the impact of discontinued operations (Note 13) (in thousands):

| Three-Month Period Ended September 30, 2014 |
| Shopping Centers |  |  | Loan Investments |  |  | Other |  |  | Total |
Total revenues | $ | 250,507 |  |  | $ | 36 |  |  |  |  |  |  | $ | 250,543 |
Operating expenses(A) |  | (74,805 | ) |  |  | — |  |  |  |  |  |  |  | (74,805 | )
Net operating income |  | 175,702 |  |  |  | 36 |  |  |  |  |  |  |  | 175,738 |
Depreciation and amortization |  | (99,480 | ) |  |  |  |  |  |  |  |  |  |  | (99,480 | )
Interest income |  |  |  |  |  | 2,652 |  |  |  |  |  |  |  | 2,652 |
Other income (expense), net |  |  |  |  |  |  |  |  | $ | (2,758 | ) |  |  | (2,758 | )
Gain on sale and change in control of interests, net |  | 3,984 |  |  |  |  |  |  |  |  |  |  |  | 3,984 |
Unallocated expenses(B) |  |  |  |  |  |  |  |  |  | (77,443 | ) |  |  | (77,443 | )
Equity in net income of joint ventures |  | 3,620 |  |  |  |  |  |  |  | — |  |  |  | 3,620 |
Income from continuing operations |  |  |  |  |  |  |  |  |  |  |  |  | $ | 6,313 |

| Three-Month Period Ended September 30, 2013 |
| Shopping Centers |  |  | Loan Investments |  |  | Other |  |  | Total |
Total revenues | $ | 206,386 |  |  | $ | 14 |  |  |  |  |  |  | $ | 206,400 |
Operating expenses(A) |  | (68,986 | ) |  |  | (75 | ) |  |  |  |  |  |  | (69,061 | )
Net operating income (loss) |  | 137,400 |  |  |  | (61 | ) |  |  |  |  |  |  | 137,339 |
Depreciation and amortization |  | (70,015 | ) |  |  |  |  |  |  |  |  |  |  | (70,015 | )
Interest income |  |  |  |  |  | 6,692 |  |  |  |  |  |  |  | 6,692 |
Other income (expense), net |  |  |  |  |  |  |  |  | $ | (2,282 | ) |  |  | (2,282 | )
Unallocated expenses(B) |  |  |  |  |  |  |  |  |  | (74,390 | ) |  |  | (74,390 | )
Equity in net (loss) income of joint ventures |  | (660 | ) |  |  |  |  |  |  | 4,440 |  |  |  | 3,780 |
Income from continuing operations |  |  |  |  |  |  |  |  |  |  |  |  | $ | 1,124 |

| Nine-Month Period Ended September 30, 2014 |
| Shopping Centers |  |  | Loan Investments |  |  | Other |  |  | Total |
Total revenues | $ | 744,765 |  |  | $ | 164 |  |  |  |  |  |  | $ | 744,929 |
Operating expenses(A) |  | (234,427 | ) |  |  | (51 | ) |  |  |  |  |  |  | (234,478 | )
Net operating income |  | 510,338 |  |  |  | 113 |  |  |  |  |  |  |  | 510,451 |
Depreciation and amortization |  | (302,901 | ) |  |  |  |  |  |  |  |  |  |  | (302,901 | )
Interest income |  |  |  |  |  | 8,937 |  |  |  |  |  |  |  | 8,937 |
Other income (expense), net |  |  |  |  |  |  |  |  | $ | (11,881 | ) |  |  | (11,881 | )
Gain on sale and change in control of interests, net |  | 87,814 |  |  |  |  |  |  |  |  |  |  |  | 87,814 |
Unallocated expenses(B) |  |  |  |  |  |  |  |  |  | (239,906 | ) |  |  | (239,906 | )
Equity in net income of joint ventures |  | 9,755 |  |  |  |  |  |  |  | 486 |  |  |  | 10,241 |
Impairment of joint venture investments |  | (9,100 | ) |  |  |  |  |  |  |  |  |  |  | (9,100 | )
Income from continuing operations |  |  |  |  |  |  |  |  |  |  |  |  | $ | 53,655 |
As of September 30, 2014: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Total gross real estate assets | $ | 10,496,860 |  |  |  |  |  |  |  |  |  |  | $ | 10,496,860 |
Notes receivable, net(C) |  |  |  |  | $ | 91,455 |  |  | $ | (33,810 | ) |  | $ | 57,645 |

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| Nine-Month Period Ended September 30, 2013 |
| Shopping Centers |  |  | Loan Investments |  |  | Other |  |  | Total |
Total revenues | $ | 601,114 |  |  | $ | 29 |  |  |  |  |  |  | $ | 601,143 |
Operating expenses(A) |  | (196,217 | ) |  |  | (376 | ) |  |  |  |  |  |  | (196,593 | )
Net operating income (loss) |  | 404,897 |  |  |  | (347 | ) |  |  |  |  |  |  | 404,550 |
Depreciation and amortization |  | (198,609 | ) |  |  |  |  |  |  |  |  |  |  | (198,609 | )
Interest income |  |  |  |  |  | 20,365 |  |  |  |  |  |  |  | 20,365 |
Other income (expense), net |  |  |  |  |  |  |  |  | $ | (3,287 | ) |  |  | (3,287 | )
Gain on sale and change in control of interests, net |  | 1,066 |  |  |  |  |  |  |  |  |  |  |  | 1,066 |
Unallocated expenses(B) |  |  |  |  |  |  |  |  |  | (218,932 | ) |  |  | (218,932 | )
Equity in net (loss) income of joint ventures |  | (7,677 | ) |  |  |  |  |  |  | 13,220 |  |  |  | 5,543 |
Income from continuing operations |  |  |  |  |  |  |  |  |  |  |  |  | $ | 10,696 |
As of September 30, 2013: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Total gross real estate assets | $ | 8,921,305 |  |  |  |  |  |  |  |  |  |  | $ | 8,921,305 |
Notes receivable, net(C) |  |  |  |  | $ | 302,130 |  |  | $ | (224,273 | ) |  | $ | 77,857 |

(A) | Includes impairment charges of $1.8 million and $9.2 million for the three-month periods ended September 30, 2014 and 2013, respectively, and $18.9 million and $22.9 million for the nine-month periods ended September 30, 2014 and 2013, respectively.

(B) | Unallocated expenses consist of general and administrative expenses, interest expense and tax expense as listed in the condensed consolidated statements of operations.

(C) | Amount includes loans to affiliates classified in Investments in and Advances to Joint Ventures on the condensed consolidated balance sheet.

16. | SUBSEQUENT EVENTS

In October 2014, a newly formed joint venture between a consolidated subsidiary of the Company and an affiliate of Blackstone acquired a portfolio of 71 shopping centers (“BRE DDR Retail Holdings III”), aggregating approximately 11.4 million square feet of owned-GLA for $1.93 billion. DDR invested $19.6 million in common equity and $300.0 million in preferred equity in the joint venture with a fixed preferred dividend rate of 8.5% per annum. The joint venture was funded through assumed debt of $436.8 million and new financing of $800.0 million. An affiliate of Blackstone owns 95% of the common equity of the joint venture and a consolidated subsidiary of DDR owns the remaining 5%.

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ITEM 2. | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) provides readers with a perspective from management on the Company’s financial condition, results of operations, liquidity and other factors that may affect the Company’s future results. The Company believes it is important to read the MD&A in conjunction with its Annual Report on Form 10-K for the year ended December 31, 2013, as amended, as well as other publicly available information.

Executive Summary

The Company is a self-administered and self-managed Real Estate Investment Trust (“REIT”) in the business of acquiring, owning, developing, redeveloping, expanding, leasing and managing shopping centers. In addition, the Company engages in the origination and acquisition of loans and debt securities collateralized directly or indirectly by shopping centers. As of September 30, 2014, the Company’s portfolio consisted of 385 shopping centers (including 148 shopping centers owned through joint ventures) in which the Company had an economic interest. These properties consist of shopping centers and enclosed malls owned in the United States and Puerto Rico. At September 30, 2014, the Company owned approximately 106 million total square feet of gross leasable area (“GLA”), which includes all of the aforementioned properties. These amounts do not include 21 assets that the Company has a nominal interest in and has not managed since January 1, 2012.

The following provides an overview of the Company’s key financial metrics (see Funds From Operations (“FFO”) described later in this section) (in thousands, except per share amounts):

| Three-Month Periods Ended September 30, |  |  | Nine-Month Periods Ended September 30, |
| 2014 |  |  | 2013 |  |  | 2014 |  |  | 2013 |
Net income (loss) attributable to common shareholders | $ | 63,012 |  |  | $ | (6,983 | ) |  | $ | 107,579 |  |  | $ | (43,744 | )
FFO attributable to common shareholders | $ | 110,804 |  |  | $ | 89,878 |  |  | $ | 278,743 |  |  | $ | 252,358 |
Operating FFO attributable to common shareholders | $ | 106,215 |  |  | $ | 90,025 |  |  | $ | 308,188 |  |  | $ | 262,172 |
Earnings per share – Diluted | $ | 0.17 |  |  | $ | (0.02 | ) |  | $ | 0.30 |  |  | $ | (0.14 | )

The increase in FFO for the three- and nine-month periods ended September 30, 2014, primarily is due to organic growth, the impact of power center acquisitions, as well as the reduction of the write-off of the original issuance costs from the redemption of the Company’s Class H Preferred Shares (as defined herein) and impairment charges on non-depreciable assets as compared to 2013, partially offset by asset dispositions and the sale of DDR’s entire interest in Sonae Sierra Brazil BV Sarl (“SSB”). The increase in net income primarily is due to the same factors impacting FFO as well as the gain on sale and change in control of interests related to the SSB sale in 2014.

Third Quarter 2014 Operating Results

During the third quarter of 2014, the Company continued to pursue opportunities to position itself for long-term growth. The Company continued strengthening the operations of its portfolio and recycling capital from asset sales into the acquisition of market-dominant 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 to improve portfolio quality. The Company continues to carefully consider opportunities that meet its selective acquisition requirements and remains prudent in its underwriting and bidding practices.

Significant third quarter 2014 transactional activity included the following:

— | Acquired the remaining 95% interest in seven power centers from its existing joint venture with Blackstone (as defined below) for $375.5 million (the “Blackstone II Acquisition”);

— | Acquired one wholly-owned power center for $31.5 million and

— | Completed the disposition of $297.3 million of assets, of which DDR’s pro-rata share of the proceeds was $289.7 million.

In October 2014, a new unconsolidated joint venture between a consolidated subsidiary of the Company and an affiliate of The Blackstone Group L.P. (“Blackstone”), acquired a portfolio of 71 shopping centers in a transaction valued at $1.93 billion.

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The Company also continued its trend of consistent internal growth and strong operating performance in the first nine months of 2014 as evidenced by the number of leases executed during the third quarter, the increase in the occupancy rate and the upward trend in the average annualized base rental rates. All prior period metrics noted below have been adjusted to exclude the SSB assets.

— | The Company leased approximately 2.7 million square feet in the third quarter of 2014, including 148 new leases and 194 renewals for a total of 342 leases. For the nine months ended September 30, 2014, the Company leased approximately 8.8 million square feet, for a total of 1,084 leases, addressing a significant percentage of its 2014 lease expirations and other occupancy availability. At December 31, 2013, the Company had 961 leases expiring in 2014, totaling 5.8 million square feet of GLA. As of November 1, 2014, approximately 0.6 million square feet of total GLA leases expiring in 2014 (or 11.6% of total average annualized base rent) remained.

— | The aggregate occupancy of the Company’s operating shopping center portfolio increased to 92.8% at September 30, 2014, as compared to 92.6% at December 31, 2013, and 92.1% at September 30, 2013. In addition, the Company’s total portfolio average annualized base rent per square foot was $13.65 at September 30, 2014, as compared to $13.35 at December 31, 2013, and $13.19 at September 30, 2013.

· | The Company continued to execute both new leases and renewals at positive rental spreads which contributed to the increase in the average annualized base rent per square foot. At December 31, 2013, the Company had 961 leases expiring in 2014, with an average base rent per square foot of $13.53. For the comparable leases executed in the third quarter of 2014, the Company generated positive leasing spreads on a pro rata basis of 23.6% for new leases and 8.2% for renewals. The Company’s leasing spread calculation only includes deals that were executed within one year of the date the prior tenant vacated. As a result, the Company believes its calculation is a good benchmark to compare the average annualized base rent of expiring leases with the comparable executed market rental rates.

— | For new leases executed during the third quarter of 2014, the Company expended a weighted-average cost of tenant improvements and lease commissions estimated at $2.88 per rentable square foot over the lease term. The Company generally does not expend a significant amount of capital on lease renewals.

RESULTS OF OPERATIONS

Continuing Operations

Shopping center properties owned as of January 1, 2013, but 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)

| Three-Month Periods Ended September 30, |  |  |  |  |
| 2014 |  |  | 2013 |  |  | $ Change |
Base and percentage rental revenues | $ | 176,290 |  |  | $ | 141,243 |  |  | $ | 35,047 |
Recoveries from tenants |  | 59,261 |  |  |  | 45,963 |  |  |  | 13,298 |
Fee and other income |  | 14,992 |  |  |  | 19,194 |  |  |  | (4,202 | )
Total revenues | $ | 250,543 |  |  | $ | 206,400 |  |  | $ | 44,143 |
| Nine-Month Periods Ended September 30, |  |  |  |  |
| 2014 |  |  | 2013 |  |  | $ Change |
Base and percentage rental revenues(A) | $ | 521,648 |  |  | $ | 409,390 |  |  | $ | 112,258 |
Recoveries from tenants(B) |  | 175,353 |  |  |  | 133,234 |  |  |  | 42,119 |
Fee and other income(C) |  | 47,928 |  |  |  | 58,519 |  |  |  | (10,591 | )
Total revenues | $ | 744,929 |  |  | $ | 601,143 |  |  | $ | 143,786 |

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

|  | Increase (Decrease) |
Acquisition of shopping centers |  | $ | 99.2 |
Comparable Portfolio Properties |  |  | 12.0 |
Development or redevelopment properties |  |  | 1.4 |
Straight-line rents |  |  | (0.3 | )
Total |  | $ | 112.3 |

The following tables present the statistics for the Company’s operating shopping center portfolio affecting base and percentage rental revenues summarized by the following portfolios: combined shopping center portfolio, wholly-owned shopping center portfolio and joint venture shopping center portfolio:

| Combined Shopping Center Portfolio September 30, |  |  | Wholly-Owned Shopping Centers(1) September 30, |  |  | Joint Venture Shopping Centers September 30, |
| 2014 |  |  |  |  | 2013 |  |  | 2014 |  |  |  |  | 2013 |  |  | 2014 |  |  |  |  | 2013 |
Centers owned |  | 385 |  |  |  |  |  | 431 |  |  |  | 237 |  |  |  |  |  | 225 |  |  |  | 148 |  |  |  |  |  | 206 |
Aggregate occupancy rate |  | 92.8 | % |  |  |  |  | 92.1 | % |  |  | 93.4 | % |  |  |  |  | 92.3 | % |  |  | 91.5 | % |  |  |  |  | 91.9 | %
Average annualized base rent per occupied square foot | $ | 13.65 | (2) |  |  |  | $ | 14.00 |  |  | $ | 14.06 | (3) |  |  |  | $ | 13.34 |  |  | $ | 12.70 | (2) |  |  |  | $ | 14.81 |

(1) | For the nine months ended September 30, 2014 and 2013, the Comparable Portfolio Properties’ aggregate occupancy rate was 93.3% and 93.1%, respectively, and the average annualized base rent per occupied square foot was $13.83 and $13.07, respectively.

(2) | Decrease primarily as a result of the Company’s sale of its entire interest in SSB in April 2014. The combined shopping center and joint venture shopping center portfolios’ rates excluding the SSB assets at September 30, 2013, were $13.19 and $12.98, respectively.

(3) | Increase primarily due to the Company’s strategic portfolio realignment achieved through the recycling of capital from asset sales into the acquisition of high quality power centers, as well as continued leasing of the existing portfolio at positive rental spreads.

(B) | The increase in recoveries from tenants primarily was driven by the impact of acquisition properties with higher recovery rates. Recoveries from tenants for all properties on a blended basis were approximately 90.6% and 89.7% of reimbursable operating expenses and real estate taxes for the nine-month periods ended September 30, 2014 and 2013, respectively.

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

| Nine-Month Periods Ended September 30, |  |  |  |  |
| 2014 |  |  | 2013 |  |  | $ Change |
Management, development and other fee income | $ | 23.7 |  |  | $ | 31.2 |  |  | $ | (7.5 | )
Ancillary and other property income |  | 18.8 |  |  |  | 20.7 |  |  |  | (1.9 | )
Lease termination fees |  | 4.1 |  |  |  | 6.2 |  |  |  | (2.1 | )
Other |  | 1.3 |  |  |  | 0.4 |  |  |  | 0.9 |
| $ | 47.9 |  |  | $ | 58.5 |  |  | $ | (10.6 | )

The decrease in management, development and other fee income for the nine-month period ended September 30, 2014, compared to the comparable period in 2013, largely is the result of a decrease in the number of properties held through unconsolidated joint ventures, which was 147 at September 30, 2014, as compared to 203 at September 30, 2013.

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Expenses from Operations (in thousands)

| Three-Month Periods Ended September 30, |  |  |  |  |
| 2014 |  |  | 2013 |  |  | $ Change |
Operating and maintenance | $ | 37,311 |  |  | $ | 33,107 |  |  | $ | 4,204 |
Real estate taxes |  | 35,681 |  |  |  | 26,694 |  |  |  | 8,987 |
Impairment charges |  | 1,813 |  |  |  | 9,260 |  |  |  | (7,447 | )
General and administrative |  | 19,540 |  |  |  | 19,246 |  |  |  | 294 |
Depreciation and amortization |  | 99,480 |  |  |  | 70,015 |  |  |  | 29,465 |
| $ | 193,825 |  |  | $ | 158,322 |  |  | $ | 35,503 |
| Nine-Month Periods Ended September 30, |  |  |  |  |
| 2014 |  |  | 2013 |  |  | $ Change |
Operating and maintenance(A) | $ | 109,448 |  |  | $ | 96,257 |  |  | $ | 13,191 |
Real estate taxes(A) |  | 106,132 |  |  |  | 77,434 |  |  |  | 28,698 |
Impairment charges(B) |  | 18,898 |  |  |  | 22,902 |  |  |  | (4,004 | )
General and administrative(C) |  | 58,878 |  |  |  | 59,123 |  |  |  | (245 | )
Depreciation and amortization(A) |  | 302,901 |  |  |  | 198,609 |  |  |  | 104,292 |
| $ | 596,257 |  |  | $ | 454,325 |  |  | $ | 141,932 |

(A) | The changes for the nine-month period ended September 30, 2014, compared to the comparable period in 2013, are due to the following (in millions):

|  | Operating and Maintenance |  |  | Real Estate Taxes |  |  | Depreciation and Amortization |
Acquisition of shopping centers |  | $ | 16.6 |  |  | $ | 27.3 |  |  | $ | 98.7 |
Comparable Portfolio Properties |  |  | (2.0 | ) |  |  | 1.0 |  |  |  | 5.4 |
Development or redevelopment properties |  |  | (1.4 | ) |  |  | 0.4 |  |  |  | 0.2 |
|  | $ | 13.2 |  |  | $ | 28.7 |  |  | $ | 104.3 |

| The increase in depreciation expense for the Comparable Portfolio Properties is attributable to a combination of accelerated depreciation charges related to changes in the estimated useful life of certain assets that are expected to be redeveloped in future periods and assets placed in service in 2013.

(B) | The Company recorded impairment charges during the three- and nine-month periods ended September 30, 2014 and 2013, related to its shopping center assets and land marketed for sale. These impairments are more fully described in Note 12, “Impairment Charges and Impairment of Joint Venture Investments,” in the notes to the condensed consolidated financial statements included herein.

(C) | General and administrative expenses were approximately 5.1% and 4.9% of total revenues, including total revenues of unconsolidated joint ventures and discontinued operations, for the nine-month periods ended September 30, 2014 and 2013, respectively. The Company continues to expense certain internal leasing salaries, legal salaries and related expenses associated with leasing and re-leasing of existing space.

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Other Income and Expenses (in thousands)

| Three-Month Periods Ended September 30, |  |  |  |  |
| 2014 |  |  | 2013 |  |  | $ Change |
Interest income | $ | 2,652 |  |  | $ | 6,692 |  |  | $ | (4,040 | )
Interest expense |  | (58,115 | ) |  |  | (54,740 | ) |  |  | (3,375 | )
Other income (expense), net |  | (2,758 | ) |  |  | (2,282 | ) |  |  | (476 | )
| $ | (58,221 | ) |  | $ | (50,330 | ) |  | $ | (7,891 | )
| Nine-Month Periods Ended September 30, |  |  |  |  |
| 2014 |  |  | 2013 |  |  | $ Change |
Interest income(A) | $ | 8,937 |  |  | $ | 20,365 |  |  | $ | (11,428 | )
Interest expense(B) |  | (179,908 | ) |  |  | (157,346 | ) |  |  | (22,562 | )
Other income (expense), net(C) |  | (11,881 | ) |  |  | (3,287 | ) |  |  | (8,594 | )
| $ | (182,852 | ) |  | $ | (140,268 | ) |  | $ | (42,584 | )

(A) | The weighted-average interest rate of loan receivables, including loans to affiliates, was 8.1% and 9.0% at September 30, 2014 and 2013, respectively. The decrease in the amount of interest income recognized in the first nine months of 2014 primarily is due to the repayment of a portion of a preferred equity investment in the fourth quarter of 2013.

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

| Nine-Month Periods Ended September 30, |
| 2014 |  |  | 2013 |
Weighted-average debt outstanding (in billions) | $ | 5.2 |  |  | $ | 4.5 |
Weighted-average interest rate |  | 5.0 | % |  |  | 5.0 | %

The weighted-average interest rate (based on contractual rates and excluding convertible debt accretion, fair market value of debt adjustments and deferred financing costs) was 4.8% at both September 30, 2014 and 2013. The increase in the weighted-average debt outstanding is a result of the acquisition of power centers in 2013 and 2014.

Interest costs capitalized in conjunction with development and redevelopment projects and unconsolidated development and redevelopment joint venture interests were $2.7 million and $6.6 million for the three- and nine-month periods ended September 30, 2014, respectively, as compared to $2.0 million and $6.8 million for the respective periods in 2013. The Company ceases the capitalization of interest as assets are placed in service or upon the suspension of construction activities.

(C) | Other income (expense) was composed of the following (in millions):

| Nine-Month Periods Ended September 30, |
| 2014 |  |  | 2013 |
Transaction and other expenses, net(1) | $ | (9.7 | ) |  | $ | (2.4 | )
Litigation-related expenses |  | (2.2 | ) |  |  | (1.2 | )
Debt extinguishment gain, net |  | — |  |  |  | 0.3 |
| $ | (11.9 | ) |  | $ | (3.3 | )

(1) | The Company recorded a $7.3 million charge in 2014 as a result of a termination fee paid to a major tenant in connection with a redevelopment.

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Other Items (in thousands)

| Three-Month Periods Ended September 30, |  |  |  |  |
| 2014 |  |  | 2013 |  |  | $ Change |
Equity in net income of joint ventures | $ | 3,620 |  |  | $ | 3,780 |  |  | $ | (160 | )
Gain on sale and change in control of interests, net |  | 3,984 |  |  |  | — |  |  |  | 3,984 |
Tax benefit (expense) of taxable REIT subsidiaries and state franchise and income taxes |  | 212 |  |  |  | (404 | ) |  |  | 616 |
| Nine-Month Periods Ended September 30, |  |  |  |  |
| 2014 |  |  | 2013 |  |  | $ Change |
Equity in net income of joint ventures(A) | $ | 10,241 |  |  | $ | 5,543 |  |  | $ | 4,698 |
Impairment of joint venture investments(B) |  | (9,100 | ) |  |  | — |  |  |  | (9,100 | )
Gain on sale and change in control of interests, net(C) |  | 87,814 |  |  |  | 1,066 |  |  |  | 86,748 |
Tax expense of taxable REIT subsidiaries and state franchise and income taxes |  | (1,120 | ) |  |  | (2,463 | ) |  |  | 1,343 |

(A) | The increase in equity in net income of joint ventures for the nine-month period ended September 30, 2014, compared to the comparable prior-year period, primarily is a result of gains recognized in 2014 from the sale of assets held in joint ventures and lower impairments recorded in 2014 as compared to 2013, partially offset by lower net income from the Company’s investment in SSB in 2014 related to the sale of its interest in the joint venture. On April 28, 2014, the Company sold its entire investment in SSB (see 2014 Strategic Transaction Activity).

Through April 28, 2014, the Company had a 50% interest in SSB, which owned an approximate 66% interest in a publicly traded company headquartered in Sao Paulo, Brazil, Sonae Sierra Brasil S.A. (“Sonae Sierra Brasil”), and an indirect interest in the Parque Dom Pedro shopping center. The Company’s effective economic ownership in Sonae Sierra Brasil was 33%. SSB uses the functional currency of Brazilian real. The operating cash flow generated by this investment was generally retained by the joint venture and reinvested in the operation of the joint venture including ground-up developments and expansions in Brazil. The weighted-average exchange rates used for recording the equity in net income into U.S. dollars were 2.26 for the Company’s ownership period in 2014 and 2.10 for the nine-month period ended September 30, 2013.

(B) | The other than temporary impairment charges of the joint venture investments are more fully described in Note 12 “Impairment Charges and Impairment of Joint Venture Investments,” in the notes to the condensed consolidated financial statements included herein.

(C) | Represents the gains associated with the Blackstone II Acquisition in the third quarter of 2014 and the Company’s sale of its 50% interest in SSB in the second quarter of 2014. This gain excludes the release of $19.7 million of foreign currency translation from accumulated other comprehensive income in the second quarter of 2014.

Discontinued Operations (in thousands)

| Three-Month Periods Ended September 30, |  |  |  |  |
| 2014 |  |  | 2013 |  |  | $ Change |
Income (loss) from discontinued operations | $ | 801 |  |  | $ | (11,959 | ) |  | $ | 12,760 |
Gain on disposition of real estate, net of tax |  | 57,105 |  |  |  | 8,701 |  |  |  | 48,404 |
| $ | 57,906 |  |  | $ | (3,258 | ) |  | $ | 61,164 |
| Nine-Month Periods Ended September 30, |  |  |  |  |
| 2014 |  |  | 2013 |  |  | $ Change |
Loss from discontinued operations | $ | (5,590 | ) |  | $ | (35,112 | ) |  | $ | 29,522 |
Gain on disposition of real estate, net of tax |  | 74,287 |  |  |  | 7,240 |  |  |  | 67,047 |
| $ | 68,697 |  |  | $ | (27,872 | ) |  | $ | 96,569 |

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The Company sold 23 shopping center properties, including two properties held for sale at December 31, 2013, during the nine-month period ended September 30, 2014, aggregating 3.7 million square feet. In addition, the Company sold 39 properties in 2013, aggregating 2.9 million square feet. Included in the reported loss from discontinued operations for the nine-month periods ended September 30, 2014 and 2013, is $8.1 million and $43.9 million, respectively, of impairment charges.

Disposition of Real Estate, Non-Controlling Interests and Net Income (Loss) (in thousands)

| Three-Month Periods Ended September 30, |  |  |  |  |
| 2014 |  |  | 2013 |  |  | $ Change |
Gain on disposition of real estate, net of tax | $ | 2,262 |  |  | $ | 1,929 |  |  | $ | 333 |
Non-controlling interests |  | 2,125 |  |  |  | (170 | ) |  |  | 2,295 |
Net income (loss) attributable to DDR |  | 68,606 |  |  |  | (375 | ) |  |  | 68,981 |
| Nine-Month Periods Ended September 30, |  |  |  |  |
| 2014 |  |  | 2013 |  |  | $ Change |
Gain on disposition of real estate, net of tax(A) | $ | 2,645 |  |  | $ | 347 |  |  | $ | 2,298 |
Non-controlling interests(B) |  | 2,985 |  |  |  | (556 | ) |  |  | 3,541 |
Net income (loss) attributable to DDR(C) |  | 127,982 |  |  |  | (17,385 | ) |  |  | 145,367 |

(A) | Amounts are generally attributable to the sale of land. The sales of land did not meet the criteria for discontinued operations because the land did not have any significant operations prior to disposition.

(B) | Change in non-controlling interests primarily is the result of the net gain/loss allocated to the minority partners related to the sale of land held for development in Russia in the third quarter of 2014 and the sale of a shopping center asset in the first quarter of 2014.

(C) | The increase in net income attributable to DDR for the nine-month period ended September 30, 2014, compared to the prior year comparable period, primarily is due to the Gain on Sale and Change in Control of Interests recorded as a result of the sale of the Company’s interest in SSB in the second quarter of 2014 and the Blackstone II Acquisition in the third quarter of 2014 as well as organic growth in operating results.

NON-GAAP FINANCIAL MEASURES

Definition and Basis of Presentation

The Company believes that FFO and Operating FFO, both non-GAAP financial measures, provide additional and useful means to assess the financial performance of REITs. FFO and Operating FFO are frequently used by securities analysts, investors and other interested parties to evaluate the performance of REITs.

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 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 and related investments, 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 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 definition of FFO provided by the National Association of Real Estate Investment Trusts (“NAREIT”). Other real estate companies may calculate FFO in a different manner.

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The Company believes that certain gains and charges recorded in its operating results are not reflective of its core operating performance. As a result, the Company also computes Operating FFO and discusses it with the users of its 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 adjustment for these charges and gains 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. 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 disclosure to improve the understanding of the Company’s operating results among the investing public, (ii) as a measure of a real estate asset’s performance, (iii) to influence acquisition, disposition and capital investment strategies and (iv) 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. The Company will continue to evaluate the usefulness and relevance of the reported non-GAAP measures, and such reported measures could change.

Management recognizes the 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 available to fund cash needs. 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 condensed consolidated financial statements.

Reconciliation Presentation

FFO and Operating FFO attributable to DDR common shareholders were as follows (in millions):

| Three-Month Periods Ended September 30, |  |  |  |  |
| 2014 |  |  | 2013 |  |  | $ Change |
FFO attributable to DDR common shareholders | $ | 110.8 |  |  | $ | 89.9 |  |  | $ | 20.9 |
Operating FFO attributable to DDR common shareholders |  | 106.2 |  |  |  | 90.0 |  |  |  | 16.2 |
| Nine-Month Periods Ended September 30, |  |  |
| 2014 |  |  | 2013 |  |  | $ Change |
FFO attributable to DDR common shareholders(A) | $ | 278.8 |  |  | $ | 252.4 |  |  | $ | 26.4 |
Operating FFO attributable to DDR common shareholders(B) |  | 308.2 |  |  |  | 262.2 |  |  |  | 46.0 |

(A) | The increase in FFO for the nine-month period ended September 30, 2014, as compared to the comparable period in 2013, primarily was due to organic growth, the impact of power center acquisitions and the reduction of the write-off of the original issuance costs from the redemption of the Company’s 7.375% Class H cumulative redeemable preferred shares (“Class H Preferred Shares”) and impairment charges of non-depreciable assets as compared to 2013. These factors were partially offset by the impact of asset dispositions as well as the sale of the Company’s interest in SSB.

(B) | The increase in Operating FFO for the nine-month period ended September 30, 2014, as compared to the comparable period in 2013, primarily was due to the same factors impacting FFO for the nine-month period.

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

| Three-Month Periods Ended September 30, |  |  | Nine-Month Periods Ended September 30, |
| 2014 |  |  | 2013 |  |  | 2014 |  |  | 2013 |
Net income (loss) attributable to DDR common shareholders(A), (B) | $ | 63.0 |  |  | $ | (7.0 | ) |  | $ | 107.6 |  |  | $ | (43.7 | )
Depreciation and amortization of real estate investments |  | 99.5 |  |  |  | 72.5 |  |  |  | 304.3 |  |  |  | 207.5 |
Equity in net income of joint ventures |  | (3.6 | ) |  |  | (3.8 | ) |  |  | (10.2 | ) |  |  | (5.5 | )
Joint ventures' FFO(C) |  | 8.4 |  |  |  | 12.7 |  |  |  | 24.5 |  |  |  | 37.1 |
Non-controlling interests (OP Units) |  | 0.2 |  |  |  | 0.1 |  |  |  | 0.5 |  |  |  | 0.2 |
Impairment of depreciable real estate assets, net of non-controlling interests |  | 0.4 |  |  |  | 24.1 |  |  |  | 11.9 |  |  |  | 64.2 |
Gain on disposition of depreciable real estate |  | (57.1 | ) |  |  | (8.7 | ) |  |  | (159.8 | ) |  |  | (7.4 | )
FFO attributable to DDR common shareholders | $ | 110.8 |  |  | $ | 89.9 |  |  | $ | 278.8 |  |  | $ | 252.4 |
Non-operating items, net(D) |  | (4.6 | ) |  |  | 0.1 |  |  |  | 29.4 |  |  |  | 9.8 |
Operating FFO attributable to DDR common shareholders | $ | 106.2 |  |  | $ | 90.0 |  |  | $ | 308.2 |  |  | $ | 262.2 |

(A) | Includes the following deductions from net income (loss) (in millions):

| Three-Month Periods Ended September 30, |  |  | Nine-Month Periods Ended September 30, |
| 2014 |  |  | 2013 |  |  | 2014 |  |  | 2013 |
Write-off of preferred shares original issuance costs | $ | — |  |  | $ | — |  |  | $ | 1.9 |  |  | $ | 5.2 |
Preferred dividends |  | 5.6 |  |  |  | 6.6 |  |  |  | 18.5 |  |  |  | 21.1 |

(B) | Straight-line rental revenue and straight-line ground rent expense, including discontinued operations, were as follows (in millions):

| Three-Month Periods Ended September 30, |  |  | Nine-Month Periods Ended September 30, |
| 2014 |  |  | 2013 |  |  | 2014 |  |  | 2013 |
Straight-line rental revenue | $ | 1.5 |  |  | $ | 1.2 |  |  | $ | 4.0 |  |  | $ | 4.3 |
Straight-line ground rent expense |  | (0.2 | ) |  |  | (0.3 | ) |  |  | (0.8 | ) |  |  | (0.9 | )

(C) | At September 30, 2014 and 2013, the Company had an economic investment in unconsolidated joint venture interests related to 147 and 203 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 and Operating FFO.

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

| Three-Month Periods Ended September 30, |  |  | Nine-Month Periods Ended September 30, |
| 2014 |  |  | 2013 |  |  | 2014 |  |  | 2013 |
Net (loss) income attributable to unconsolidated joint ventures(1) | $ | (0.2 | ) |  | $ | (57.9 | ) |  | $ | 1.2 |  |  | $ | (140.5 | )
Depreciation and amortization of real estate investments |  | 35.5 |  |  |  | 58.6 |  |  |  | 118.0 |  |  |  | 180.9 |
Impairment of depreciable real estate assets |  | 11.1 |  |  |  | 21.9 |  |  |  | 11.7 |  |  |  | 66.4 |
(Gain) loss on disposition of depreciable real estate, net |  | (8.5 | ) |  |  | 21.2 |  |  |  | (31.9 | ) |  |  | 26.7 |
FFO | $ | 37.9 |  |  | $ | 43.8 |  |  | $ | 99.0 |  |  | $ | 133.5 |
FFO at DDR's ownership interests(2) | $ | 8.4 |  |  | $ | 12.7 |  |  | $ | 24.5 |  |  | $ | 37.1 |
Operating FFO at DDR's ownership interests(D) | $ | 8.4 |  |  | $ | 12.3 |  |  | $ | 24.6 |  |  | $ | 36.4 |

(1) | Revenues include the following (in millions):

| Three-Month Periods Ended September 30, |  |  | Nine-Month Periods Ended September 30, |
| 2014 |  |  | 2013 |  |  | 2014 |  |  | 2013 |
Straight-line rents | $ | 0.3 |  |  | $ | 0.9 |  |  | $ | 2.4 |  |  | $ | 2.8 |
DDR's proportionate share |  | — |  |  |  | 0.1 |  |  |  | 0.5 |  |  |  | 0.5 |

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

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

Operating FFO Adjustments

The Company’s adjustments to arrive at Operating FFO are composed of the following for the three- and nine-month periods ended September 30, 2014 and 2013 (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.

| Three-Month Periods Ended September 30, |  |  | Nine-Month Periods Ended September 30, |
| 2014 |  |  | 2013 |  |  | 2014 |  |  | 2013 |
Impairment charges – non-depreciable consolidated assets | $ | 1.4 |  |  | $ | — |  |  | $ | 15.1 |  |  | $ | 2.6 |
Other (income) expense, net(A) |  | 2.8 |  |  |  | 2.4 |  |  |  | 12.1 |  |  |  | 4.0 |
Equity in net (income) loss of joint ventures – currency adjustments, debt extinguishment costs and transaction costs |  | — |  |  |  | (0.4 | ) |  |  | 0.1 |  |  |  | (0.7 | )
Impairment of joint venture investments on non-depreciable assets(B) |  | — |  |  |  | — |  |  |  | 9.1 |  |  |  | — |
Gain on sale and change in control of interests, net |  | (4.0 | ) |  |  | — |  |  |  | (4.0 | ) |  |  | (1.1 | )
Gain on disposition of non-depreciable real estate, net of non-controlling interests and foreign currency |  | (4.8 | ) |  |  | (1.9 | ) |  |  | (4.9 | ) |  |  | (0.2 | )
Write-off of preferred shares original issuance costs(B) |  | — |  |  |  | — |  |  |  | 1.9 |  |  |  | 5.2 |
Total adjustments from FFO to Operating FFO | $ | (4.6 | ) |  | $ | 0.1 |  |  | $ | 29.4 |  |  | $ | 9.8 |
FFO attributable to DDR common shareholders |  | 110.8 |  |  |  | 89.9 |  |  |  | 278.8 |  |  |  | 252.4 |
Operating FFO attributable to DDR common shareholders | $ | 106.2 |  |  | $ | 90.0 |  |  | $ | 308.2 |  |  | $ | 262.2 |

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(A) | Amounts included in other income/expense are detailed as follows (in millions):

| Three-Month Periods Ended September 30, |  |  | Nine-Month Periods Ended September 30, |
| 2014 |  |  | 2013 |  |  | 2014 |  |  | 2013 |
Transaction and other (income) expense, net | $ | 1.6 |  |  | $ | 2.0 |  |  | $ | 9.9 |  |  | $ | 3.1 |
Litigation-related expenses |  | 1.2 |  |  |  | 0.4 |  |  |  | 2.2 |  |  |  | 1.2 |
Debt extinguishment gain, net |  | — |  |  |  | — |  |  |  | — |  |  |  | (0.3 | )
| $ | 2.8 |  |  | $ | 2.4 |  |  | $ | 12.1 |  |  | $ | 4.0 |

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

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 the first nine months of 2014, the Company continued to strategically allocate cash flow from operating, investing and financing activities.

The Company’s consolidated and unconsolidated debt obligations generally require monthly or semi-annual payments of principal and/or interest over the term of the obligation. While the Company believes that it has several viable sources to obtain capital and fund its business, including capacity under its facilities described below, 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 J.P. Morgan Securities, LLC and Wells Fargo Securities, LLC (the “Unsecured Credit Facility”). The Unsecured Credit Facility provides for borrowings of up to $750 million, and includes an accordion feature for expansion of availability up 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 (together with the Unsecured Credit Facility, the “Revolving Credit Facilities”). The Company’s borrowings under these facilities bear interest at variable rates based on LIBOR plus 115 basis points at September 30, 2014, subject to adjustment based on the Company’s current corporate credit ratings from Moody’s Investors Service (“Moody’s”) and Standard and Poor’s (“S&P”).

The Revolving 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, 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 September 30, 2014, 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 believes it will continue to be able to operate in compliance with these covenants for the remainder of 2014 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 its balance sheet risk 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; however, the Company may issue long-term debt and/or equity securities in lieu of, or in addition to, borrowing under its Revolving Credit Facilities. The following information summarizes the availability under the Revolving Credit Facilities at September 30, 2014 (in millions):

Cash and cash equivalents | $ | 134.3 |
Revolving Credit Facilities | $ | 815.0 |
Less: |  |  |
Amount outstanding |  | (23.5 | )
Letters of credit |  | (10.9 | )
Borrowing capacity available | $ | 780.6 |

In June 2013, the Company entered into agreements for the future issuance of up to $250.0 million of common shares under a continuous equity program. This program replaced any previous continuous equity program maintained by the Company. As of October 31, 2014, the Company had $234.6 million of its common shares available for future issuance under its continuous equity program.

The Company intends to continue to maintain a long-term financing strategy with limited 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.

At September 30, 2014, there were no unsecured debt maturities until May 2015 and no consolidated mortgage maturities until September 2015. In July, 2014, the Company repaid $304.2 million of secured mortgage indebtedness, which was scheduled to mature in October 2014.

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 2014 to ensure that it executes its strategy to extend debt duration, increase liquidity and improve the Company’s credit ratings, with the goal of lowering the Company’s balance sheet risk and cost of capital.

Unconsolidated Joint Ventures

The Company’s unconsolidated joint venture mortgage debt attributable to the Coventry II Fund assets that had matured and was past due at September 30, 2014, or was maturing in 2014 (see Off-Balance Sheet Arrangements, Coventry II Fund and Note 8 “Commitments and Contingencies,” in the notes to the condensed consolidated financial statements included herein), was $61.1 million at September 30, 2014 (of which the Company’s proportionate share was $7.9 million).

At September 30, 2014, the Company’s remaining unconsolidated joint venture mortgage debt maturing in 2014 was $135.4 million (of which the Company’s proportionate share was $27.1 million) and is all attributable to one joint venture arrangement. At September 30, 2014, this joint venture had $11.5 million in escrow with the lender generated from previous asset sales restricted to repay a portion of the mortgage upon maturity. The Company expects the joint venture to use the escrow funds as well as proceeds from the sale of the remaining assets to repay the mortgage upon maturity. No assurance can be provided that this obligation will be repaid as currently anticipated.

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 common shares.

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

| Nine-Month Periods Ended September 30, |
| 2014 |  |  | 2013 |
Cash flow provided by operating activities | $ | 315,425 |  |  | $ | 276,678 |
Cash flow provided by (used for) investing activities |  | 310,407 |  |  |  | (395,509 | )
Cash flow (used for) provided by financing activities |  | (577,681 | ) |  |  | 122,941 |

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Operating Activities: The change in cash flow provided by operating activities for the nine-month period ended September 30, 2014, as compared to the comparable period in 2013, primarily was due to additional cash flow from acquired properties and changes in accounts payable and accrued expenses.

Investing Activities: The change in cash flow provided by investing activities for the nine-month period ended September 30, 2014, as compared to the comparable period in 2013, primarily was due to proceeds received from the sale of assets, mainly from the Company’s 50% interest in SSB and a change in restricted cash (capital improvements) activity associated with the repayment of mortgage debt.

Financing Activities: The change in cash flow used for financing activities for the nine-month period ended September 30, 2014, as compared to the comparable period in 2013, primarily was due to an increase in overall debt repayment activity and a decrease in proceeds from the issuance of common shares, preferred shares and senior notes.

The Company satisfied its REIT requirement of distributing at least 90% of ordinary taxable income with declared common and preferred share cash dividends of $185.4 million for the nine-month period ended September 30, 2014, as compared to $150.3 million for the same period in 2013. Because actual distributions were greater than 100% of taxable income, federal income taxes have not been incurred by the Company thus far during 2014.

The Company declared a quarterly dividend of $0.155 per common share for each of the first three quarters of 2014. The Board of Directors of the Company will continue to monitor the 2014 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

2014 Strategic Transaction Activity

The Company has a portfolio management strategy to recycle capital from lower quality, lower growth potential assets into Prime Assets to achieve long-term growth and value creation.

Acquisitions

BRE DDR Retail Holdings III

In October 2014, a newly formed joint venture between a consolidated subsidiary of the Company and an affiliate of Blackstone acquired 71 shopping centers (“BRE DDR Retail Holdings III”), aggregating 11.4 million square feet of owned-GLA for $1.93 billion. DDR invested $19.6 million in common equity and $300 million in preferred equity in the joint venture with a fixed preferred dividend rate of 8.5% per annum. The joint venture was funded through assumed debt of $436.8 million and new financing of $800.0 million. An affiliate of Blackstone owns 95% of the common equity of the joint venture and a consolidated subsidiary of DDR owns the remaining 5%. DDR will provide customary leasing and management services and has the right of first offer to acquire 10 of the assets under specified conditions consistent with past transactions with Blackstone.

Blackstone II Acquisition

In September 2014, the Company acquired sole ownership of a portfolio of seven power centers owned by BRE DDR Retail Holdings II, a joint venture with Blackstone (“Blackstone II Acquisition”). The transaction was valued at $395.3 million at 100%. In connection with the closing, the Company assumed Blackstone’s 95% share of $233.3 million of mortgage debt, at face value, of which $28.0 million was repaid upon closing. In addition, $31.2 million of the preferred equity interest previously funded by the Company was repaid upon closing. The Company accounted for this transaction as a step acquisition. Due to the change in control that occurred, the Company recorded a Gain on Sale and Change in Control of Interests of $4.0 million related to the difference between the Company’s carrying value and fair value of the previously held equity interest.

Additional Acquisitions

During the nine-month period ended September 30, 2014, the Company acquired five power center assets (Colorado Springs, Colorado; Roseville, California; Cincinnati, Ohio; Chicago, Illinois and Philadelphia, Pennsylvania) with a combined GLA of 1.3 million square feet for a gross purchase price of $299.9 million. The Company assumed $48.4 million of mortgage debt at a fair value of $50.8 million in connection with these acquisitions and issued 1.0 million Operating Partnership Units (“OP Units”) valued at $17.9 million at closing.

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Disposition of Joint Venture Interest

In April 2014, the Company sold its entire investment in SSB for $343.6 million to Mr. Alexander Otto and certain of his affiliates. Through this investment, the Company owned an approximate 33% interest in Sonae Sierra Brasil, as well as an indirect ownership interest in the Parque Dom Pedro shopping center. Dr. Finne, a director of DDR, is a Managing Director of certain entities affiliated with Mr. Otto that agreed to purchase a portion of the Company’s ownership interest in SSB. The Company believes that the sales price and other terms of the transaction were negotiated on terms equivalent to those prevailing in an arms’ length transaction. The transaction was approved by a special committee of the Company’s Board of Directors, which committee included all directors except for the two board members recommended for nomination by Mr. Otto.

Other Dispositions

During the nine-month period ended September 30, 2014, the Company sold 23 shopping center properties aggregating 3.7 million square feet and other consolidated non-income producing assets for an aggregate sales price of $439.8 million. The Company recorded a net gain of $76.9 million, which excludes the impact of an aggregate $80.7 million in related impairment charges that were recorded in prior periods related to the assets sold in 2014. One of the land parcels sold was the entire acreage of land held for development in Russia. As such, the Company no longer has any investments in Russia.

During the nine-month period ended September 30, 2014, the Company’s unconsolidated joint ventures sold assets generating gross proceeds of $106.1 million, of which the Company’s proportionate share was $21.1 million. For the 2014 disposition activity, a net gain of $32.1 million was recorded by the joint ventures, of which the Company’s proportionate share was $7.7 million.

As discussed above, a part of the Company’s portfolio management strategy is to recycle capital from lower quality, lower growth potential assets into the acquisition of higher quality assets with long-term growth potential. The Company has been marketing certain assets for sale that do not meet the Company’s current business strategy. 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. Accordingly, 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.

Development Opportunities

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

The Company will continue to closely monitor its expected spending in 2014 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 2014.

One of the important benefits of the Company’s asset class is the ability to phase development and redevelopment projects over time until appropriate leasing levels can be achieved. To maximize the return on capital spending, the Company generally adheres to strict investment criteria thresholds. The Company also evaluates the credit quality of the tenants and in the case of redevelopments, generally seeks to upgrade the retailer merchandise mix. The Company applies this strategy to both its consolidated and certain unconsolidated joint ventures that own assets under development and redevelopment because the Company has significant influence and, in most cases, approval rights over decisions relating to significant capital expenditures.

The Company’s consolidated land holdings are classified in two separate line items on the condensed consolidated balance sheets included herein, (i) Land and (ii) Land Held for Development and Construction in Progress. At September 30, 2014, the $2.3 billion of Land classified on the Company’s balance sheet primarily consists of land that is part of its operating shopping center portfolio. However, this amount also includes a small portion of vacant land comprised primarily of outlots or expansion pads adjacent to the operating shopping center properties. Approximately 169 acres of this land, which has a recorded cost basis of approximately $11 million, is available for future development.

Included in Land Held for Development and Construction in Progress at September 30, 2014, are $163.1 million of recorded costs related to land and projects under development, for which active construction has temporarily ceased or has not yet commenced. The Company estimates that if it proceeded with the development of these sites, approximately 2.0 to 3.0 million square feet of GLA could be developed. 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 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.

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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 has invested approximately $286.7 million in various development and redevelopment projects at September 30, 2014, and expects to bring between $250 million to $300 million of investments in service in 2014, on a net basis, after deducting sales proceeds from outlot sales. The investments placed in service include approximately $100 million of costs associated with the Chicago, Illinois location that was acquired in June 2014. The Company’s unconsolidated joint ventures do not have any significant development or redevelopment projects underway.

The current significant consolidated development projects are as follows:

Location |  | Estimated/Actual Initial Owned Anchor Opening |  | Estimated Owned GLA (Thousands) |  |  | Estimated Gross Cost (Millions) |  |  | Estimated Net Cost (Millions) |  |  | Net Cost Incurred at September 30, 2014 (Millions) |
Chicago, Illinois (The Maxwell) |  | 2Q14 |  |  | 240.1 |  |  | $ | 118.4 |  |  | $ | 118.4 |  |  | $ | 115.9 |
Orlando, Florida (Lee Vista) |  | 4Q15 |  |  | 367.1 |  |  |  | 102.5 |  |  |  | 100.8 |  |  |  | 28.0 |
Seabrook, New Hampshire (Seabrook Town Center) |  | 2Q14 |  |  | 173.2 |  |  |  | 109.4 |  |  |  | 89.5 |  |  |  | 76.9 |
New Haven, Connecticut (Guilford Commons) |  | 4Q15 |  |  | 130.2 |  |  |  | 62.7 |  |  |  | 62.7 |  |  |  | 25.1 |
Merriam, Kansas (Merriam Village) |  | 3Q14 |  |  | 60.0 |  |  |  | 22.1 |  |  |  | 20.2 |  |  |  | 15.9 |
Total |  |  |  |  | 970.6 |  |  | $ | 415.1 |  |  | $ | 391.6 |  |  | $ | 261.8 |

The Company’s redevelopment projects are typically substantially complete within a year of the construction commencement date. At September 30, 2014, the Company’s significant consolidated redevelopment projects are as follows:

Location |  | Owned GLA Subject to Redevelopment (Thousands) |  |  | Total GLA Subject to Redevelopment (Thousands) |  |  | Estimated Gross Cost (Millions) |  |  | Cost Incurred at September 30, 2014 (Millions) |
Bayamon, Puerto Rico (Plaza Del Sol) |  |  | 88.5 |  |  |  | 88.5 |  |  | $ | 27.7 |  |  | $ | 26.7 |
Plant City, Florida (Lake Walden Square) |  |  | 119.9 |  |  |  | 126.9 |  |  |  | 17.4 |  |  |  | 11.8 |
Phoenix, Arizona (Ahwatukee Foothills Town Center) |  |  | 203.6 |  |  |  | 203.6 |  |  |  | 14.4 |  |  |  | 9.3 |
Chester, Virginia (Bermuda Square) |  |  | 62.8 |  |  |  | 129.5 |  |  |  | 13.7 |  |  |  | 4.6 |
Fajardo, Puerto Rico (Plaza Fajardo) |  |  | 36.3 |  |  |  | 36.3 |  |  |  | 8.8 |  |  |  | 8.2 |
Columbia, South Carolina (Harbison Court) |  |  | 47.1 |  |  |  | 47.1 |  |  |  | 8.6 |  |  |  | 5.8 |
Schaumburg, Illinois (Woodfield Village Green) |  |  | 12.7 |  |  |  | 12.7 |  |  |  | 5.0 |  |  |  | 4.8 |
Brandon, Florida (Lake Brandon Plaza) |  |  | 35.7 |  |  |  | 35.7 |  |  |  | 2.8 |  |  |  | 1.9 |
Total |  |  | 606.6 |  |  |  | 680.3 |  |  | $ | 98.4 |  |  | $ | 73.1 |

For redevelopment assets completed in 2013 and in the first nine months of 2014, the assets placed in service were completed at approximately $136 cost per square foot.

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, one development project and one management company. Such arrangements are generally with institutional investors located throughout the United States.

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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 September 30, 2014, are as follows (in order of gross asset book value):

Unconsolidated Real Estate Ventures |  | Effective Ownership Percentage(A) |  |  | Assets Owned in Several States |  | Company-Owned Square Feet (Millions) |  |  | Total Debt (Millions) |
DDRTC Core Retail Fund, LLC |  |  | 15.0% |  |  | 26 shopping centers |  |  | 8.4 |  |  | $ | 815.0 |
DDR Domestic Retail Fund I |  |  | 20.0% |  |  | 57 shopping centers |  |  | 8.0 |  |  |  | 920.3 |
DDR-SAU Retail Fund, LLC |  |  | 20.0% |  |  | 27 shopping centers |  |  | 2.4 |  |  |  | 177.7 |

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

The Company also has a preferred equity investment aggregating $38.6 million at September 30, 2014, with an annual interest rate of 10% from a joint venture with Blackstone.

The Company’s unconsolidated joint ventures had aggregate outstanding indebtedness to third parties of $2.6 billion and $4.2 billion at September 30, 2014 and 2013, respectively (see Item 3. Quantitative and Qualitative Disclosures About Market Risk). Such mortgages 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, under certain circumstances, if such amounts are not paid by the joint venture based on the Company’s pro rata share of such amount, which aggregated $5.0 million at September 30, 2014.

The Company is also involved with overseeing the development activities for several of its unconsolidated joint ventures to the extent they 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 has interests in consolidated and unconsolidated joint ventures that own real estate assets in Canada. 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 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.

Coventry II Fund

At September 30, 2014, the Company maintained several investments with the Coventry II Fund. The Company co-invested approximately 20% in each joint venture. The Company’s management and leasing agreements with the joint ventures expired according to their terms on December 31, 2011, and the Company decided not to renew these agreements. The Company and the Coventry II Fund have been parties to certain litigation (see Note 8, “Commitments and Contingencies,” in the notes to the condensed consolidated financial statements included herein). On October 10, 2014, the Company and Coventry entered into a settlement agreement. The agreement, which is subject to various contingencies, provides for mutual releases of all claims and the dismissal of the pending litigation.

As of September 30, 2014, the aggregate carrying amount of the Company’s net investment in the Coventry II Fund joint ventures was $1.1 million. In addition, the Company advanced $66.9 million of financing that is reserved in full (the “Bloomfield Loan”). The asset owned by Coventry II DDR Westover LLC was sold in March 2014 for an aggregate gain of $16.8 million, of which the Company’s share was $4.1 million. In addition, in the first nine months of 2014, an asset in Chicago, Illinois was foreclosed by the lender and two assets owned by the Service Holdings LLC joint venture were sold. The Company had previously written down its investment to zero in these three assets. The Company does not anticipate expending a significant amount of funds pursuant to the terms of the settlement agreement or to address ongoing operational needs.

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A summary of the Coventry II Fund investments as of September 30, 2014, is as follows (in millions):

Unconsolidated Real Estate Ventures |  | Shopping Center or Development Owned |  | Loan Balance Outstanding at September 30, 2014 |  |
Coventry II DDR Bloomfield LLC |  | Detroit, Michigan |  | $ | 21.9 |  | (A), (B), (C), (D)
Coventry II DDR Buena Park LLC |  | Orange County, California |  |  | 73.0 |  | (B)
Coventry II DDR Fairplain LLC |  | Benton Harbor, Michigan |  |  | 18.3 |  | (B)
Coventry II DDR Phoenix Spectrum LLC |  | Phoenix, Arizona |  |  | 65.2 |  |
Coventry II DDR Totem Lakes LLC |  | Seattle, Washington |  |  | 27.5 |  | (B), (D)
Service Holdings LLC |  | 17 retail sites in several states |  |  | 66.4 |  | (B), (C), (D)

(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. In addition, the Bloomfield Loan from the Company 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 October 31, 2014, lenders were managing the cash receipts and expenditures related to the assets collateralizing these loans.

(C) | As of October 31, 2014, these loans were 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.

FINANCING ACTIVITIES

In the first nine months of 2014, the Company issued 0.7 million common shares at a weighted-average price of $17.81 per share, through the use of the Company’s continuous equity program, generating net proceeds of $11.8 million, to partially fund the acquisition of power centers (see Liquidity and Capital Resources and Sources and Uses of Capital).

In June 2014, the Company closed on a $75.0 million non-recourse mortgage loan secured by Plaza Escorial, a 636,000 square-foot shopping center in Puerto Rico. The loan has a seven-year term and an interest rate of 3.59%.

In May 2014, the Company redeemed the remaining $55.0 million of its Class H Preferred Shares at a redemption price of $504.6094 per Class H Preferred Share (the sum of $500.00 per Class H Preferred Share and dividends per Class H Preferred Share of $4.6094 prorated to the redemption date of May 30, 2014) or $25.2305 per depositary share (the sum of $25.00 per depositary share and dividends per depositary share of $0.2305 prorated to the redemption date of May 30, 2014). The Company recorded a charge of $1.9 million in the second quarter of 2014 related to the write-off of the Class H Preferred Shares’ original issuance costs.

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CAPITALIZATION

At September 30, 2014, the Company’s capitalization consisted of $5.2 billion of debt, $350.0 million of preferred shares and $6.1 billion of market equity (market equity is defined as common shares and OP Units outstanding multiplied by $16.73, the closing price of the Company’s common shares on the New York Stock Exchange at September 30, 2014). The debt to total market capitalization ratio was 0.45 to 1.0 at September 30, 2014, as compared to the ratio of 0.46 to 1.0 at September 30, 2013. The closing price of the common shares on the New York Stock Exchange was $15.71 at September 30, 2013. The Company’s total debt consisted of the following (in billions):

| At September 30, |
| 2014 |  |  | 2013 |
Fixed-rate debt(A) | $ | 4.8 |  |  | $ | 4.3 |
Variable-rate debt |  | 0.4 |  |  |  | 0.3 |
| $ | 5.2 |  |  | $ | 4.6 |

(A) | Includes $530.4 million and $631.8 million of variable-rate debt that had been effectively swapped to a fixed rate through the use of interest rate derivative contracts at September 30, 2014 and 2013, respectively.

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, S&P and Fitch Ratings, Inc. 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 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

As of September 30, 2014, there were no unsecured maturities until May 2015 and no consolidated mortgage maturities until September 2015.

At September 30, 2014, the Company had letters of credit outstanding of $31.6 million. The Company has not recorded any obligations associated with these letters of credit, the majority of which was collateral for existing indebtedness and other obligations of the Company.

In conjunction with the development of shopping centers, the Company had entered into commitments with general contractors aggregating approximately $28.6 million for its consolidated properties at September 30, 2014. 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 operating cash flow, new or existing construction loans, asset sales or revolving credit facilities.

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 September 30, 2014, the Company had purchase order obligations, typically payable within one year, aggregating approximately $8.5 million related to the maintenance of its properties and general and administrative expenses.

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

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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 Company continues to believe there is a favorable landlord dynamic in the supply-and-demand curve for quality locations within well-positioned shopping centers. Many retailers have strong store opening plans for the remainder of 2014 and 2015. Further, the Company continues to see strong demand from a broad range of retailers for its space, particularly in the off-price sector, which is a reflection of the general outlook of consumers who are demanding more value for their dollars. This is evidenced by the continued high volume of leasing activity, which was 8.8 million square feet of space for both new leases and renewals for the first nine months of 2014. The Company also benefits from its real estate asset class (shopping centers), which typically has a higher return on capital expenditures, as well as a diversified tenant base with only two tenants exceeding 3.0% of annualized consolidated revenues and the Company’s proportionate share of unconsolidated joint venture revenues (TJX Companies at 3.4% and Walmart at 3.2%). Other significant tenants include Target, Kohl’s, Bed Bath & Beyond, PetSmart, Dick’s Sporting Goods, Ross Stores, Lowe’s and Publix, 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 its tenants to continue operating even in a challenging economic environment.

The retail shopping sector continues to be 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 can force some market share away from weaker retailers, which could require them to downsize and close stores and/or declare bankruptcy. In many cases, the loss of a weaker tenant or downsizing of space creates a value-add opportunity to re-lease space at higher rents to a stronger retailer. Overall, the Company believes its portfolio remained stable at September 30, 2014, as evidenced by the increase in the occupancy rate as further described below. However, there can be no assurance that the loss of a tenant or down-sizing of space will not adversely affect the Company (see Item 1A. Risk Factors in the Company’s Annual Report on Form 10-K for the year ended December 31, 2013, as amended).

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. 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. The shopping center portfolio occupancy was at 92.8% at September 30, 2014, as compared to 92.1% at September 30, 2013. The Company continues to sign new leases at rental rates that have reflected consistent growth on an annual basis.

The total portfolio average annualized base rent per occupied square foot, excluding the results of SSB, was $13.65 at September 30, 2014, as compared to $13.35 at December 31, 2013, and $13.19 at September 30, 2013. The increase primarily was due to the Company’s strategic portfolio realignment achieved through the recycling of capital from the sale of lower quality assets into the acquisition of power centers with higher growth potential as well as continued lease up and renewal of the existing portfolio at positive rental spreads. 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 over the expected lease term for new leases executed during the third quarter of 2014 for the U.S. portfolio was only $2.88 per rentable square foot. The Company generally does not expend a significant amount of capital on lease renewals. 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 challenging economic times.

NEW ACCOUNTING STANDARDS

New Accounting Standards are more fully described in Note 1, “Nature of Business and Financial Statement Presentation,” of the Company’s condensed consolidated financial statements.

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FORWARD-LOOKING STATEMENTS

Management’s discussion and analysis should be read in conjunction with the condensed consolidated financial statements and the notes thereto appearing elsewhere in this report. Historical results and percentage relationships set forth in the condensed 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 in the Company’s Annual Report on Form 10-K for the year ended December 31, 2013, as amended.

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 any economic 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 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;

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— | 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;

— | 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 real estate assets outside the contiguous United States, which may carry risks in addition to those the Company faces with its domestic properties and operations. To the extent the Company pursues opportunities that may subject the Company to different or greater risks than those associated with its domestic operations, including cultural and consumer differences and differences in applicable laws and political and economic environments, these risks could significantly increase and adversely affect its results of operations and financial condition. The Company owns significant assets in Puerto Rico and an interest in consolidated joint ventures that were formed to develop and own properties in Canada;

— | The Company is subject to potential environmental liabilities;

— | 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 and

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— | 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.

ITEM 3. | 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:

|  | September 30, 2014 |  |  | December 31, 2013 |
|  | 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) |  | $ | 4,816.4 |  |  |  | 4.2 |  |  |  | 5.1 | % |  |  | 92.0 | % |  | $ | 4,967.9 |  |  |  | 4.7 |  |  |  | 4.9 | % |  |  | 93.8 | %
Variable-Rate Debt(A) |  | $ | 419.6 |  |  |  | 3.1 |  |  |  | 1.7 | % |  |  | 8.0 | % |  | $ | 326.8 |  |  |  | 3.9 |  |  |  | 1.7 | % |  |  | 6.2 | %

(A) | Adjusted to reflect the $530.4 million and $631.4 million of variable-rate debt that LIBOR was swapped to at a fixed-rate of 1.3% at September 30, 2014 and December 31, 2013, respectively.

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

|  | September 30, 2014 |  |  | December 31, 2013 |
|  | 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 |  | $ | 2,028.6 |  |  | $ | 394.1 |  |  |  | 3.2 |  |  |  | 5.5 | % |  | $ | 2,504.2 |  |  | $ | 454.3 |  |  |  | 3.7 |  |  |  | 5.6 | %
Variable-Rate Debt |  | $ | 543.9 |  |  | $ | 85.3 |  |  |  | 2.1 |  |  |  | 3.6 | % |  | $ | 778.4 |  |  | $ | 175.8 |  |  |  | 5.3 |  |  |  | 8.2 | %

The Company intends to use retained cash flow, proceeds from asset sales, equity and debt 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 could increase. The Company does not believe, however, that increases in interest expense as a result of inflation will significantly impact 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 September 30, 2014 and December 31, 2013, the interest rate on the Company’s $530.4 million and $631.4 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.

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The carrying value of the Company’s fixed-rate debt is adjusted to include the $530.4 million and $631.4 million of variable-rate debt that was swapped to a fixed rate at September 30, 2014 and December 31, 2013, 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 September 30, 2014 and December 31, 2013, is summarized as follows (in millions):

|  | September 30, 2014 |  |  |  | December 31, 2013 |  |
|  | 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 |  | $ | 4,816.4 |  |  | $ | 5,087.0 |  | (A) |  | $ | 4,904.1 |  | (B) |  | $ | 4,967.9 |  |  | $ | 5,226.7 |  | (A) |  | $ | 4,958.4 |  | (B)
Company's proportionate share of joint venture fixed-rate debt |  | $ | 394.1 |  |  | $ | 407.7 |  |  |  | $ | 396.8 |  |  |  | $ | 454.3 |  |  | $ | 467.3 |  |  |  | $ | 454.1 |  |

(A) | Includes the fair value of Swaps, which was a liability of $2.7 million, net, and $3.2 million, net, at September 30, 2014 and December 31, 2013, respectively.

(B) | Includes the fair value of Swaps, which was an asset of $11.7 million, net, and $15.5 million, net, at September 30, 2014 and December 31, 2013, 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 September 30, 2014, would result in an increase in interest expense of approximately $3.1 million for the Company and $0.6 million representing the Company’s proportionate share of the joint ventures’ interest expense relating to variable-rate debt outstanding for the nine-month period ended September 30, 2014. The estimated increase in interest expense for the period does not give effect to possible changes in the daily balance of 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 that 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 September 30, 2014, the Company had no other material exposure to market risk.

ITEM 4. | CONTROLS AND PROCEDURES

Based on their evaluation as required by Securities Exchange Act Rules 13a-15(b) and 15d-15(b), the Company’s Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”) have concluded that the Company’s disclosure controls and procedures (as defined in Securities Exchange Act Rules 13a-15(e) and 15d-15(e)) were effective as of the end of the period covered by this Quarterly Report on Form 10-Q to ensure that information required to be disclosed by the Company in reports that it files or submits under the Securities Exchange Act is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms and were effective as of the end of such period to ensure that information required to be disclosed by the Company in reports that it files or submits under the Securities Exchange Act is accumulated and communicated to the Company’s management, including its CEO and CFO, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

During the three-month period ended September 30, 2014, there were no changes in the Company’s internal control over financial reporting that materially affected or are reasonably likely to materially affect the Company’s internal control over financial reporting.

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PART II

OTHER INFORMATION

ITEM 1. | LEGAL PROCEEDINGS

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.

ITEM 1A. | RISK FACTORS

None.

ITEM 2. | UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

ISSUER PURCHASES OF EQUITY SECURITIES

| (a) |  |  | (b) |  |  | (c) |  |  | (d) |
| Total Number of Shares Purchased(1) |  |  | Average Price Paid per Share |  |  | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs |  |  | Maximum Number (or Approximate Dollar Value) of Shares That May Yet Be Purchased Under the Plans or Programs (Millions) |
July 1 – 31, 2014 |  | 114,454 |  |  | $ | 17.68 |  |  |  | — |  |  |  | — |
August 1 – 31, 2014 |  | 1,437 |  |  |  | 17.65 |  |  |  | — |  |  |  | — |
September 1 – 30, 2014 |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Total |  | 115,891 |  |  | $ | 17.68 |  |  |  | — |  |  |  | — |

(1) | Consists of common shares surrendered or deemed surrendered to the Company to satisfy statutory minimum tax withholding obligations in connection with the vesting and/or exercise of awards under the Company’s equity-based compensation plans.

ITEM 3. | DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. | MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. | OTHER INFORMATION

None.

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ITEM 6. | EXHIBITS

31.1 |  | Certification of principal executive officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934
31.2 |  | Certification of principal financial officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934
32.1 |  | Certification of chief executive officer pursuant to Rule 13a-14(b) of the Securities Exchange Act of 1934 and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of this report pursuant to the Sarbanes-Oxley Act of 2002 1
32.2 |  | Certification of chief financial officer pursuant to Rule 13a-14(b) of the Securities Exchange Act of 1934 and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of this report pursuant to the Sarbanes-Oxley Act of 2002 1
101.INS |  | XBRL Instance Document 2
101.SCH |  | XBRL Taxonomy Extension Schema Document 2
101.CAL |  | XBRL Taxonomy Extension Calculation Linkbase Document 2
101.DEF |  | XBRL Taxonomy Extension Definition Linkbase Document 2
101.LAB |  | XBRL Taxonomy Extension Label Linkbase Document 2
101.PRE |  | XBRL Taxonomy Extension Presentation Linkbase Document 2

1 | Pursuant to SEC Release No. 34-4751, these exhibits are deemed to accompany this report and are not “filed” as part of this report.

2 | Submitted electronically herewith.

Attached as Exhibit 101 to this report are the following formatted in XBRL (Extensible Business Reporting Language): (i) Condensed Consolidated Balance Sheets as of September 30, 2014 and December 31, 2013, (ii) Condensed Consolidated Statements of Operations for the Three- and Nine-Month Periods Ended September 30, 2014 and 2013, (iii) Consolidated Statements of Comprehensive Income (Loss) for the Three- and Nine-Month Periods Ended September 30, 2014 and 2013, (iv) Consolidated Statement of Equity for the Nine-Month Period Ended September 30, 2014, (v) Consolidated Statements of Cash Flows for the Nine-Month Periods Ended September 30, 2014 and 2013 and (vi) Notes to Condensed Consolidated Financial Statements.

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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 thereunto duly authorized.

|  | DDR CORP.
|  | By: |  | /s/ Christa A. Vesy
|  |  |  | Name: |  | Christa A. Vesy
|  |  |  | Title: |  | Executive Vice President and Chief Accounting Officer (Authorized Officer)
Date: November 7, 2014 |  |  |  |  |  |

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EXHIBIT INDEX

Exhibit No. Under Reg. S-K Item 601 |  | Form 10-Q Exhibit No. |  | Description |  | Filed Herewith or Incorporated Herein by Reference
31 |  | 31.1 |  | Certification of principal executive officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934 |  | Filed herewith
31 |  | 31.2 |  | Certification of principal financial officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934 |  | Filed herewith
32 |  | 32.1 |  | Certification of chief executive officer pursuant to Rule 13a-14(b) of the Securities Exchange Act of 1934 and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of this report pursuant to the Sarbanes-Oxley Act of 2002 |  | Filed herewith
32 |  | 32.2 |  | Certification of chief financial officer pursuant to Rule 13a-14(b) of the Securities Exchange Act of 1934 and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of this report pursuant to the Sarbanes-Oxley Act of 2002 |  | Filed herewith
101 |  | 101.INS |  | XBRL Instance Document |  | Submitted electronically herewith
101 |  | 101.SCH |  | XBRL Taxonomy Extension Schema Document |  | Submitted electronically herewith
101 |  | 101.CAL |  | XBRL Taxonomy Extension Calculation Linkbase Document |  | Submitted electronically herewith
101 |  | 101.DEF |  | XBRL Taxonomy Extension Definition Linkbase Document |  | Submitted electronically herewith
101 |  | 101.LAB |  | XBRL Taxonomy Extension Label Linkbase Document |  | Submitted electronically herewith
101 |  | 101.PRE |  | XBRL Taxonomy Extension Presentation Linkbase Document |  | Submitted electronically herewith

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