2.	Investments in and Advances to Joint Ventures

The Company’s equity method joint ventures, which are included in Investments in and Advances to Joint Ventures in the Company’s consolidated balance sheet at December 31, 2015, are as follows:

Unconsolidated Real Estate Ventures	Effective Ownership Percentage		Assets Owned
BRE DDR Retail Holdings III		5.0%	56 shopping centers in several states
BRE DDR Retail Holdings IV	5.0		6 shopping centers in several states
DDRTC Core Retail Fund, LLC	15.0		25 shopping centers in several states
DDR Domestic Retail Fund I	20.0		55 grocery-anchored retail centers in several states
DDR – SAU Retail Fund, LLC	20.0		23 grocery-anchored retail centers in several states
Other Joint Venture Interests	25.75–79.45		3 shopping centers in 2 states

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

	December 31,
	2015			2014
Condensed Combined Balance Sheets
Land	$	1,343,889		$	1,439,849
Buildings		3,551,227			3,854,585
Fixtures and tenant improvements		191,581			200,696
		5,086,697			5,495,130
Less: Accumulated depreciation		(817,235	)		(773,256	)
		4,269,462			4,721,874
Land held for development and construction in progress		52,390			55,698
Real estate, net		4,321,852			4,777,572
Cash and restricted cash		58,916			100,812
Receivables, net		52,768			80,508
Other assets, net		318,546			376,540
	$	4,752,082		$	5,335,432

Mortgage debt	$	3,177,603		$	3,534,553
Notes and accrued interest payable to the Company		1,556			144,831
Other liabilities		219,799			276,998
		3,398,958			3,956,382
Redeemable preferred equity		395,156			305,310
Accumulated equity		957,968			1,073,740
	$	4,752,082		$	5,335,432

Company's share of accumulated equity	$	115,871		$	122,937
Redeemable preferred equity		395,156			305,310
Basis differentials		(42,402	)		(12,954	)
Deferred development fees, net of portion related to the Company's interest		(2,449	)		(2,562	)
Amounts payable to the Company		1,556			2,117
Investments in and Advances to Joint Ventures	$	467,732		$	414,848

	For the Year Ended December 31,
	2015			2014			2013
Condensed Combined Statements of Operations
Revenues from operations	$	524,697		$	485,764		$	635,933
Expenses from operations:
Operating expenses		195,957			167,691			210,829
Impairment charges^(A)		52,700			21,583			43,913
Depreciation and amortization		207,816			151,651			201,021
Interest expense		140,701			171,803			204,893
Other (income) expense, net		7,193			18,249			2,298
		604,367			530,977			662,954
Loss before tax expense and discontinued operations		(79,670	)		(45,213	)		(27,021	)
Income tax expense (primarily Sonae Sierra Brasil), net		—			(6,565	)		(27,553	)
Loss from continuing operations		(79,670	)		(51,778	)		(54,574	)
Discontinued operations:
Loss from discontinued operations^(A)		—			(13,955	)		(65,951	)
Gain (loss) on disposition of real estate, net of tax^(B)		—			55,020			(19,190	)
Loss before gain on disposition of real estate, net		(79,670	)		(10,713	)		(139,715	)
Gain on disposition of real estate, net		17,188			10,116			794
Net loss	$	(62,482	)	$	(597	)	$	(138,921	)
Income attributable to non-controlling interests		—			(2,022	)		(26,005	)
Net loss attributable to unconsolidated joint ventures	$	(62,482	)	$	(2,619	)	$	(164,926	)
Company's share of equity in net (loss) income of joint ventures^(C)	$	(5,289	)	$	9,218		$	3,314
Basis differential adjustments^(D)		2,154			1,771			3,505
Equity in net (loss) income of joint ventures^(C)	$	(3,135	)	$	10,989		$	6,819

(A)

For the years ended December 31, 2015, 2014 and 2013, the Company’s proportionate share was $10.5 million, $4.4 million and $6.6 million, respectively. Impairment charges included in discontinued operations related to asset sales were $11.1 million and $49.3 million for the years ended December 31, 2014 and 2013, respectively, of which the Company’s proportionate share was $0.8 million and $4.0 million, respectively. The Company’s share of the impairment charges was reduced by the impact of the other than temporary impairment charges recorded on these investments, as appropriate, as discussed below.

(B)

For the year ended December 31, 2013, the loss primarily was attributable to an investment in the Coventry II Fund (as defined below) in which the Company had a 20% interest. The joint venture recorded a loss of $32.6 million on the transfer of its ownership of one of its properties to the lender. The Company’s share of the loss was zero as the Company had previously written off its investment in this operating property.

(C)	The Company did not record income or loss from those investments in which its investment basis was zero. As of March 13, 2015, the Company no longer had an interest in the Coventry II Fund assets (see below).

(D)

The difference between the Company’s share of net income, as reported above, and the amounts included in the Company’s consolidated statements of operations is attributable to the amortization of basis differentials, the recognition of deferred gains and differences in gain (loss) on sale of certain assets recognized due to the basis differentials and other than temporary impairment charges.

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

	For the Year Ended December 31,
	2015		2014		2013
Management and other fees	$	26.0	$	24.9	$	29.3
Development fees and leasing commissions		6.8		6.4		10.0
Interest income		26.0		11.0		16.1

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

BRE DDR Retail Holdings Joint Venture Acquisitions

In 2015 and 2014, in two separate transactions, two joint ventures between consolidated affiliates of the Company and The Blackstone Group L.P. (“Blackstone”) each acquired a portfolio of shopping centers (the “BRE DDR Joint Ventures”). The joint ventures were completed on similar terms as follows:

Terms	BRE DDR Retail Holdings IV		BRE DDR Retail Holdings III
Date acquired	December 2015		October 2014
Number of centers		6		70
Gross leasable area ("GLA")^(A)	1.3 million		11.4 million
DDR common equity interest (5%)	$12.9 million		$19.6 million
DDR preferred equity interest	$82.6 million		$300.0 million
Preferred equity fixed dividend rate per annum		8.5%		8.5%
Transaction value at 100%	$250.1 million		$1.93 billion
Maximum preferred equity fixed distribution deferral		23.5%		23.5%
Fixed distribution rate per annum for any deferred and unpaid preferred equity distributions		8.5%		8.5%
Mortgage debt assumed at 100%	$112.9 million		$436.8 million
New mortgage financings at 100%	—		$800.0 million

(A)

All references to GLA or square feet are unaudited.

Blackstone owned 95% of the common equity of the BRE DDR Joint Ventures, and consolidated affiliates of DDR owned the remaining 5%. The Company’s preferred equity entitled it to certain preferential cumulative distributions payable out of operating and capital proceeds pursuant to the terms and conditions of the preferred equity. This distribution was recognized as interest income within the Company’s consolidated statements of operations and classified as a note receivable in Investments in and Advances to Joint Ventures on the Company’s consolidated balance sheets. The preferred equity is redeemable (1) at Blackstone’s option, in whole or in part, following acquisition of the properties, subject to early redemption premiums; (2) at DDR’s option after seven years; (3) at varying levels based upon specified financial covenants upon a sale of properties over a certain threshold and (4) upon the incurrence of additional indebtedness by the joint venture. The Company provides leasing and property management services to all of the joint venture properties. The Company cannot be removed as the property and leasing manager until the preferred equity is redeemed in full (except for certain specified events).

Coventry II Fund

Coventry Real Estate Advisors L.L.C. (“CREA”) formed Coventry Real Estate Fund II, L.L.C. and Coventry Fund II Parallel Fund, L.L.C. (collectively, the “Coventry II Fund”). The Coventry II Fund was formed with several institutional investors and CREA as the investment manager. The Company and the Coventry II Fund entered into various joint ventures to invest in a variety of retail properties that presented opportunities for value creation. In March 2015, the Company, CREA and the Coventry II Fund finalized a settlement agreement in which the Company acquired Coventry II Fund’s 80% interest in Buena Park Place in Orange County, California (Note 3), and the Company transferred to Coventry II Fund its 20% ownership interest in the 21 remaining assets of the Coventry II Fund investments. The Company accounted for this transaction as a step acquisition and, as a result, recorded a Gain on Change in Control of Interests of $14.3 million related to the difference between the carrying value of its equity investment and the fair value of the asset acquired.

Management Company Investment

In 2015, the Company sold its 50% membership interest in a property management company to its joint venture partner and recorded a loss on sale of $6.5 million, which is included in Gain on Sale and Change in Control of Interests, net in the Company’s consolidated statements of operations. In addition, in the fourth quarter of 2015, the Company sold two shopping centers to its former joint venture partner aggregating a gross purchase price of $112.3 million, and the Company recorded a Gain on Sale of $59.8 million.

Sonae Sierra Brazil BV SARL (“SSB”)

On April 28, 2014, affiliates of DDR sold to Mr. Alexander Otto and certain of his affiliates the Company’s 50% ownership interest in SSB for approximately $343.6 million, which represented the Company’s entire investment in Brazil. SSB owned an approximate 66% interest in a publicly traded company in Brazil, Sonae Sierra Brasil, S.A., which owned 10 shopping centers in Brazil and an indirect interest in the Parque Dom Pedro shopping center. The Company’s effective economic ownership in this investment was approximately 33%. The Company recorded a Gain on Sale of Interests of $83.7 million in 2014, which included the reclassification of $19.7 million of foreign currency translation from Accumulated OCI (Note 11). See discussions of related party considerations (Note 14). 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 2.14 for the year ended December 31, 2013.

Discontinued Operations

In 2014 and 2013, the unconsolidated joint ventures sold 37 properties and 27 properties, respectively, which are reflected as discontinued operations in the condensed combined statements of operations.