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Developers Diversified Realty Corp. (NYSE:DDR)

Q1 2008 Earnings Call

April 25, 2008 11:00 am ET

Executives

Michelle Dawson - VP of IR

Scott Wolstein - CEO

Bill Schafer - CFO

David Oakes - Chief Investment Officer

Analysts

Christine McElroy - Banc of America

Christeen Kim - Deutsche Bank

Michael Bilerman - Citigroup

Craig Schmidt - Merrill Lynch

Jonathan Habermann - Goldman Sachs

Tom - Goldman Sachs

David Toti - Lehman Brothers

Michael Mueller - JPMorgan

Carol Campbell - Hilliard Lyons

Jim Sullivan - Green Street Advisors

Rich Moore - RBC Capital Markets

Ambika Goel - Citigroup

Operator

Good day, ladies and gentlemen. And welcome to the first quarter 2008 Developers Diversified Earnings Call. (Operator Instructions).

I would now like to turn the presentation over to your host for today’s call, Mrs. Michelle Dawson. Please proceed, please.

Michelle Dawson

Thank you, Erica, and good morning. Thanks for joining us. On today's call you'll hear from Scott Wolstein, Dan Hurwitz, Bill Schafer and David Oakes.

Before we begin, I'd lake to alert you that certain of our statements today maybe forward-looking. Although, we believe that such statements are based upon reasonable assumptions, you should understand those statements are subject to risks and uncertainties and actual results may differ materially from the forward-looking statements. Additional information about such factors and uncertainties that could cause actual results to differ, maybe found in the press release issued yesterday and filed on Form-8K and in our Form-10K for the year ended December 31st, 2007, and filed with the SEC. I'd also like to request that callers observe a two-question limit during the Q & A portion of our call in order to give everyone a chance to participate. If you have additional questions, please rejoin the queue.

At this time, I'll turn the call over to Scott Wolstein.

Scott Wolstein

Thank you, Michelle, and good morning, everybody. I'm pleased to announce this quarter's financial results of $0.83 per share or funds from operations, which compares to $0.91 per share in the prior year. And after adjusting for certain one time items as Bill will discuss shortly, our results actually show a 50% year-over-year increase.

Considering the challenging environment in which we are operating, we are very pleased with our portfolio performance and with our outlook for the remainder of the year. As our assets feature long-term leases with high credit quality retailers. And as our tenants appeal to consumer's demand for value and convenience, our portfolio has historically performed very well in times of macroeconomic stress.

Our executive team has seen many difficult cycles. We know that whenever there is dislocation in the credit markets, there are also very attractive investment opportunities for those that are well positioned.

During today's call, you will hear more about how we are advancing our corporate priority. First, we remain highly focused on our balance sheets and we continue to find financing at attractive pricing. Bill Schafer will give you a recap of our recent financing activity, our capital plan for the remainder of the year. And you will hear what he is sharing from his banking relationships.

Second, our portfolio is well positioned to outperform in an environment where consumers are more price sensitive than ever and our largest tenants offering the most attractive value proposition to consumers. As presented in our quarterly financial supplement, our property fundamentals remain strong and consistent with our history. Rent growth is solid. Spreads on new leases are strong, at 28% and a portfolio lease rate of nearly 96% remains high. While some deceleration in retail or new store growth is expected and certainly makes sense given a driven dramatic decline in new retail development starts.

Many of our tenants actually do very well in tougher economies and view these challenges as an opportunity to gain market share. In this economy, where we are seeing many consumers save their shopping patterns to save money, retailers that offer price leadership and value will be the clear beneficiary. Moreover, many of our largest tenant relationships have the highest credit ratings in the industry, and the best balance sheets in the business.

Third, we are seeing more buzz in investment opportunities created by market dislocation. Dan will describe how we are evaluating opportunities to partner with local developers, which are experiencing the greatest distress as a result of the current lending environment. And you will hear how international development opportunities are complimenting our domestic pipeline.

David Oakes will then address our capital allocation strategy and explain how our decisions to take advantage of today's attractive investment opportunities are carefully balanced within the objective of preserving capital.

With that, I will turn the call over to Bill Schafer.

Bill Schafer

Thanks Scott. With regard to our fist quarter operating results, I would like to highlight certain items, primarily those that were included in our prior year results that did not reoccur in 2008.

First, the most significant item related to the release of certain tax valuation reserves, which resulted in a net $15 million tax benefit in 2007, as compared to $1 million of expense in 2008.

Second, a reduction in other income of approximately $4.3 million, which was attributable to an acquisition fee of $6.3 million earned in 2007, relating to the Inland transaction. This was partially offset by a $2 million increase in lease terminations in 2008, as compared to 2007.

Third, merchant buildings, land sale gains and promoted income were $3.5 million higher than the first quarter of ’07, as compared to 2008.

And fourth, interest income was $3.1 million higher in 2007, primarily due to interest earned on funds placed in escrow for Inland shareholders, until the transfer agent finalized distributions.

And fifth, included in our 2007 G&A cost was approximately $4.9 million relating to a charge associated with the departure of our former President and certain Inland integration cost.

After eliminating the impact of these items from each year’s FFO, the increase in FFO per share was over 15% in 2008, as compared to 2007. This increase is primarily attributed to a full quarter operating results from the inland acquisition, as compared to just over a month in 2007, and increase in same store net operating income, offset to a certain extent by an increase in bad debt expense. And an approximate 40 basis points decrease in the company’s weighted average interest rate in 2008, as compared to 2007.

As you heard from Scott, from a financial perspective, our primary focus in 2008 will be with regard to our balance sheet. As Dan and David will discuss in more detail, given the abundance of opportunities available, we can afford to be much more selective with regard to how much capital is committed to construction in progress. As far as sources of funds are concerned as we discussed in February, the majority of our asset sales are expected to occur during the second half of the year. These sales are expected to generate several hundred million of proceeds to DDR and aggregate transactional income comparable to the levels achieved in 2007.

We've also been very active in the debt markets. We just recently announced that we have closed on our $500 million in new financings including five year $350 million secured financing on [technical difficulty] six properties of loan to value of approximately 55% and an interest rate of 5%. The effective loan to value on these properties has been increased to 70%, as they are also included as collateral for our secured term loan, which bears interest at LIBOR plus 70 basis points.

Other loan closings included a $71 million construction loan on our Homestead, Florida development and the refinancing of $72 million of joint-venture debt with a partner during the quarter. In addition, our 50% joint-venture with Sonae Sierra, which owns and develops retail real estate in Brazil, closed on a 50 million reais credit facility in late February.

Year-to-date 15 properties were unencumbered with an aggregate value of approximately $700 million. In addition we just closed this week on a three year $40 million construction loan relating to the expansion of our corporate headquarters in Beachwood, Ohio. The interest rate on this loan is at LIBOR plus 110 basis points. We are also actively pursuing additional secured project refinancing, primarily with regard to our joint-ventures, and we are confident that these would be successfully completed over the next several months.

Our line of credit availability at March 31, 2008 was nearly $600 million and we continue to maintain a substantial unencumbered asset pool of nearly $6 billion.

Since the second quarter of 2007, the debt capital markets have been extremely volatile and challenging, in fact significant financial institutions have experienced unprecedented write-offs and liquidity issues themselves. Currently vendor appetite for new financing is mixed, rates available from commercial and investment banks are widely divergent. Often the larger banks are interested in operating participations and their good opportunities for local and regional banks.

We have also noted that write companies are becoming more selective and appear to be more interested in smaller loans up to around $50 million. The clear message we are receiving from all of our vendors is that the quality of sponsorship and the relationships strength are critical factors in their decision-making process. Fortunately, we have established excellent relationships with numerous financial institutions over the past 15 years, which have enabled us to continue to access the debt markets effectively over the past year.

As we have discussed on almost every conference call, we believe that it is extremely important to maintain a conservative balance sheet and access to all types of capital, which provides maximum financial flexibility. And we will continue to operate in this manner. As Scott indicated we have successfully navigated ourselves through difficult economic times in the past and have emerged as a stronger company, due to the opportunities created in this type of environment, and we believe this to be true today as well.

I will now turn the call over to Dan.

Dan Hurwitz

Thank you, Bill and good morning. I want to add to Scott’s remarks that our first quarter results demonstrate a strong start to the year, regarding the true fundamentals of our business. In spite of the uncertainty present in today’s economy, we are extremely pleased with the quality of our portfolio, the success of our leasing and development activities, and the internal strength of our infrastructure and resulting platform. Our strategic portfolio management efforts over the last few years in terms of acquiring high quality shopping centers, selling non-core assets, redeveloping existing properties and delivering new developments, have reduced the average age of our assets by over five years and have reduced the necessary amount of CapEx needed to lease and operate our properties. These improvements in the quality of our portfolio and the cash efficiency of our operations have enhanced our ability to produce positive results despite the current challenges facing the economy.

Our first quarter leased rate was a very solid 95.8%. This was obviously a metric we were watching very closely, as the challenges facing the economy in Q3, and Q4 of 2007, and Q1 of 2008 were generally expected to negatively impact occupancy, and we are extremely pleased that our properties performed consistent with historical norms in that regard.

Equally as pleasing, there continues to be a healthy demand for quality space. As illustrated by our 28% spread on new leases signed during the quarter, which continues to track well above our long term average. Our continued ability to post robust new rent spreads is indicative of the stellar efforts of our leasing team, the quality and geographic diversity of our portfolio, and the overall demand for prime retail locations. In addition, we executed over 2 million square feet of renewals, which posted average cash spreads of 7%. Importantly for 2008, our renewals are 80% complete, portfolio wide.

Year-to-date we have proactively completed 30 portfolio reviews with many of our most active retailers. In those meetings, it has become clear that retailers are proceeding with new store expansion cautiously, and are looking at location and sponsorship as a key risk mitigators. As a result, we are seeing continued opportunities, some presented by the retailers themselves, as dislocation in the capital markets continues to eliminate many private developers and creates heightened uncertainty and much less transparency regarding tenants future openings. These factors combine to result in a greater awareness of sponsorship and focus on certainty of execution, which both work in our favor. With the Las Vegas RECon Convention on the horizon, it is our goal to further cultivate strong tenant relationships, primarily focusing on 2009 deals. And the continued listing of our development pipeline, which currently stands at 75% executed or committed.

We're also talking with several tenants regarding a limited number of 2008 commitments, many of which are result of instances where other developers have failed to deliver space to tenants. To-date, our leasing team has scheduled over 800 meetings for RECon to facilitate tenant demand in opening new store locations throughout our portfolio.

Contrary to the strong operating metrics, we are cognizant of the environment, and are very aware of bankruptcy and store closure possibilities. We know who is struggling within our portfolio and continue to engage in dialogue in an effort to mitigate risk and most importantly limit downtime if we do lose certain tenants. RECon gives us a great opportunity to market currently vacant and even anticipated vacant spaces even though the ultimate future of that space may not yet be determined by the tenant. Through our National Tenant Account Program, we will continue to monitor, communicate and actively manage the risk that is currently present.

As we've said many times, retail is clearly a game of winners and losers. In a decelerating economic environment, it's natural to see retailers that offer shoppers a compelling value proposition and a strength of balance sheet to greatly expand their market share at expense of competitors that are less well positioned. As a retail landlord, we know that this can and will occur, and it does in our portfolio, it is our intent to take advantage of the opportunity to release the space as a means of maximizing revenue potential and limiting downtime.

One example of this approach is reflected at our Rio Hondo center in Puerto Rico, where a 33, 000 square foot CompUSA store, the largest in our portfolio was located. We expect a soon to be announced investment grade category leader to assume the formal CompUSA space with no interruption in rent, no retrofit cost to us, plus payment of $1 million assignment fee.

In total we had 11 CompUSA locations, eight of which currently have either tenant commitments or executed lease assignments with tenants such as Fresh Market, HomeGoods and Bye-Bye Baby.

Within our development business, we continue to see value-add opportunities created by the current market dislocation. As I mentioned earlier, local developers appear to be the greatest source of the stress today. This trend began over a year ago, when a number of small local developers began coming to us and offering co-investment opportunities in their projects. We have seen this trend escalate over the last 12 months and today we are clearly seeing significant pressure on developers that do not have the wherewithal, both in terms of capital, and in terms of leasing relationships, to see their projects through to completion. We firmly believe that this trend will accelerate and deal economics will continually improve as we navigate the current cycle.

Another obvious trend within the development sector that results from less private developer competition is that land prices and terms in general are more favorable than a year ago, which should have a positive impact on future yields. We are also seeing entitlement process become slightly less onerous to navigate, as municipality's desire for tax revenue becomes more acute. Overall, the combination of these market trends when coupled with our tenant relationships will put us in a strong position to maximize risk adjusted returns and achieve even better margins on future projects.

In addition to the opportunities available in the US market, the opportunities we’re evaluating in our international markets are very compelling, but for different reasons. For example, the real estate markets in Brazil, Russia and even Canada are more fragmented and currently offer relatively less intense competition, creating niches for opportunistic investment. From a yield comparison standpoint, we are underwriting projects in Brazil to yield in the mid-teens on an un-levered cash on cost basis. Yields in Russia and Canada are lower than Brazil, but their supply constraint characteristics and growth profiles will offer attractive internal rates of return to our shareholders.

Although many uncertainties can exist with international projects, the real estate risk of these projects in terms of lease-up is virtually nonexistent. For example, in Brazil retail sales rose over 9.5% in 2007, compared to the prior year. Retail sales in Canada grew by nearly 6% in 2007, and by over 15% in Russia. While development deliveries in our domestic portfolio will continue to ramp up over the next 18 months, the contribution from our international portfolio, where we expect to see significant value appreciation, will enhance our delivery volume in 2010 and beyond.

In closing, our success is deeply rooted in our ability to attract and retain high caliber employees, who demonstrate relentless dedication and commitment to achieving our collective corporate goals. To that end, and regard to our annual review process, we recently awarded a record setting number of internal promotions to various business units, including leasing, development, property management, accounting, information technology, legal and marketing. Also, four members from our recent class of management trainees advanced to full time positions, while three members from prior classes were promoted to offices of the company and now have a position on our executive committee.

As we are committed to achieving profitable results for our shareholders and institutional clients, we're also committed to rewarding those employees who excel and whose achievements have a meaningful impact on our overall corporate performance. At this point, I'd like to turn the call to David.

David Oakes

Thanks Dan. As you've already heard, our capital allocation decisions are regularly being reviewed and executed in a disciplined fashion. This reflects our primary interest in maintaining a strong balance sheet, while still allowing us to capitalize on attractive investment opportunities that are being created by the current market conditions. We are constantly reviewing investments, based upon on their risks and return attributes, and today's market is offering some interesting opportunities that we have not seen in many years.

For example, we continue to view our development platform as an attractive means of creating value. On the domestic front, we continue to see opportunities to partner with local developers who are facing capital constraints and are finding it more difficult to deliver development projects. We expect to continue to see these opportunities in the coming quarters, and as we've mentioned previously, we have a dedicated team in place, sourcing these deals and evaluating the projects that best fit on our investment profile.

Interestingly, despite the current verge in the development investment by the public markets, we are seeing considerable private market demand for the caliber of projects and returns that we have consistently been able to deliver, and we will consider working with this private capital in this regard.

We recently announced the 6.5% stake in Macquarie DDR Trust. We view the purchase of NDT units as another attractive investment opportunity for DDR. By purchasing the Trust's units we were able to increase our ownership in some of the best assets in our portfolio in a manner that provides immediate and outsized returns. Purchasing these units also ensures our alignment of interest with those of other unit holders of the Trust.

Also as we've stated in previous calls, we continue to view the repurchase of our own shares, an attractive vehicle for deploying capital and we regularly review share repurchases, one of the many investment alternatives available, but always with a careful eye on our balance sheer strength.

Based on numerous meetings we had with institutional investors, its apparent that they continue to have interest in commercial real estate and top tier managers, but are now being more cautious given the uncertainty in asset pricing and lending markets. Despite the shift in demand and expectations, we feel that we are well positioned to continue to expand and strengthen our funds management business. As the commercial real estate environment continues to change; we view institutional joint-ventures as an attractive niche and feel we are well positioned to continue to create meaningful value for both our shareholders and our partners.

Discussions with investors regarding the sales of certain recently build assets are also progressing. To-date and based on conversations we have with investors and brokers there is not any meaningful change in pricing and our plans remain the same for closing on the sale of these assets in the second part of 2008. We are seeing considerable interest from both foreign and domestic institutional entities, with strong balance sheet. As is our practice with transactions that are in progress, we will limit our comments on these sales until they are more final, so as to not compromise our negotiating position.

At this point, I will turn the call back over to Scott for his closing remarks.

Scott Worstein

Thanks, David. As you’ve heard, we remain focused on our balance sheet while evaluating opportunities created by the distress in the market. We expect property fundamentals in our portfolio to remain stable as we are well positioned to benefit from an environment in which consumers are increasingly price sensitive and are less inclined to buy fully priced discretionary items. We are seeing this trend play out in the performance of department stores versus discount retailers, and among discount apparel retailers versus specialty retailers. This trend is even more pronounced among grocery retailers, where Wal-Mart is clearly gaining market share as food prices rise.

There are several other aspects of our portfolio quality that help insulate us from more macro-volatility. The most important of those are, first, tenant credit quality, which is paramount, especially in today’s environment. Second, the relatively low amount of capital expenditures needed to maintain our shopping centers and achieve our same store NOI growth. These expenditures have a meaningful impact on the cash efficiency of our business, which again is more important today than ever. And third, the long term consistency of our portfolio metrics, as measured by occupancy, rent growth, leasing spreads, particularly when normalized for CapEx, is illustrative of the stability and quality of our portfolio.

From the leasing perspective, as well, asset quality is critical. Retailers make location decisions and far more than simple demographics. Asset quality is also reflected by tenancy and by physical location. Demographics do play a part into finding asset quality, but retailers analyze markets based on trade area, which is irregularly shaped to reflect the variable, such as asset size or critical mass, competition, physical or geographic barriers, transportation, access, et cetera.

Therefore from both an operating standpoint and the leasing standpoint, we expect our portfolio to continue to post strong results despite the threat of a weakening economy. With respect to our guidance we are affirming our previous 2008 FFO estimates of $3.95 to $4.05 per share. With respect to individual quarters, there will be some seasonality. Analyst should apply lower weightings to the second and fourth quarter, which should attribute a significantly higher weighting to the third quarter funds from operation, which is when we expect to recognize the largest portions of our transactional income.

At this point, I'll open the phone lines to receive your questions.

Question-and-Answer Session

Operator

(Operator Instructions). Our first question comes from the line of Christine McElroy from Banc of America. Please proceed.

Christine McElroy - Banc of America

Hi, good morning.

Scott Worstein

Good morning.

Christine McElroy - Banc of America

All of you talked about undercapitalized developers looking for stronger partners on projects, have you added any projects to your pipeline recently that were sourced in this way? And can you provide a little bit more color on how you would underwrite and structure a development partnership like that with original developers in distress?

Scott Worstein

Sure. First we have not added any projects to our pipeline currently under this structured, but we have a number of them that we are evaluating. We've looked at a lot of them a number of them. There is a reason why they are in distress, and that’s not why we want to get involved in them, but we have a number in the pipeline now that looks very promising and pending our gauge of tenant interest at ICSE in Vegas, we would probably be adding some in the second quarter.

And regard to the structure of the deals that are all very different, its really -- a lot depends on the capability of the developer and how the developer wants to handle the situation and also depends on how deep the distress is, that the developers is in? What their goal is? If there goal is stay in the ownership cycle, if they want to perform leasing services or the development services or if they are looking to just recoup some cost and try to get out and survive for another day.

So we have seen everything from a 50/50 pay/pursue proposal to developers that are willing to subordinate all their interest and all their fees to a 9.5% to 10% return, just to get us enticed to join the project. So a lot of it will depend on the where the developer is in his cycle and what our level of interest is. But it is going to be, there is not going to be a real form in any of these deals. It is gong to be very, very deal specific.

Bill Schafer

I am sorry, Christie I want to add something to what Dan said. I just want to make sure everybody understands our role in those. We really view ourselves as pretty much a bridge for private capital to invest in these projects. It really isn't something we're looking at expand our obligations for construction progress.

What we offer is good access to capital that those developers don't have, but we also offer the capital provider, a partner that can step in and complete the project if the private developer basically see his economics evaporate and oftentimes that's where people get into trouble when they come in as financial partners with undercapitalized developers without book of experience and then the developers see his profits evaporate and he is basically willing to walk away and the capital provider is left helpless.

So we have done this quite a bit in the past, its been very successful and we've made a lot of money for our joint venture partners in that regard and oftentimes we have had to step in and complete the projects ourselves.

Christine McElroy - Banc of America

Okay. And then, on your current ground of building pipeline, what kind of stabilized deals are you projecting and what's your estimate of the spread between yield and market cap rate?

Bill Schafer

We are currently projecting stabilized yields between 9.5 and about 10.25 and our exit cap rate is about 6.5.

Dan Hurwitz

Yeah, I think we are still experiencing in the market in the 6.5 or lower range for the quality of the product we are developing but in terms of underwriting on a go-forward basis to assure that we dealt with the uncertainties in the current market we've underwritten even higher exit cap rates on that.

Bill Schafer

And just to be clear when we quoted those kinds of yields I want you to know that they are fully loaded that backs out higher development fees, which shows up elsewhere in our operating results. It also sets forth a contingency for cost overruns and a structural reserve going forward as well as the vacancy factor going forward and it doesn’t include straight line rents. So those numbers could go all over the place depending on how other people treat those items.

Dan Hurwitz

And is loaded with the call for capital to incorporate the timing and legitimate cost that carries the project.

Christine McElroy - Banc of America

Thanks so much.

Operator

Our next question comes from the line of Christeen Kim from Deutsche Bank. Please proceed.

Christeen Kim - Deutsche Bank

Hey. Good morning, guys. Just a follow-up on the development yields. Has there been any change to your internal expectations on any of your projects in terms of stabilization dates or yields et cetera?

Scott Worstein

After the current projects in the pipeline, there have not been any significant changes. For projects going forward we have changed our underwriting and we are expecting higher yields than we had in the past.

Christeen Kim - Deutsche Bank

Is that just due to the easing on land cost?

Bill Schafer

I think it is partly due to the easing on land cost. It's partly due to a lack of competition in the market and we still do see tenant demand for new development projects, so, while the demand has decreased, supply has decreased more dramatically than the demand and we have been looking at some projects that are creeping back up into the double digits from the outset.

Scott Worstein

The other thing that we're doing in our underwriting, that's different is that because of pressure on commodity prices, we've actually built in, increases in construction cost for the entailment period on the project, rather than looking at what the cost would be today, so in addition to the contingency that we have, we also have a built in, in place an escalator on the construction cost to insulate us from any risk and commodity prices.

Christeen Kim - Deutsche Bank

Great, thanks and just on the distressed opportunities, what could those actually represents in terms of dollars invested by DDR?

Scott Worstein

Well again, I don't think its going to be a significant amount of our dollars invested, I think, at the end of the day, we'll be generating primarily financial and operating promotes on these transactions and we'll probably be providing 10% to 25% at most of the cost of the projects. But in terms of the volume of the project, it could, over the next few years, it could represent several $100 million.

Christeen Kim - Deutsche Bank

Great, thanks, guys.

Operator

(Operator Instructions) Our next question comes from the line of Michael Bilerman from Citigroup, please proceed.

Michael Bilerman - Citigroup

Hi, Good morning. I we could go you here as well. Can you just talk about how aggressive I guess you will be, I guess in the next couple quarters prior to selling the $500 million of assets you want to sell? How aggressive are you going to be putting a new capital prior to getting those sales done?

Scott Worstein

We are not very aggressive, Michael, I mean I think that we talk about getting various opportunities and that's existent in today's environment. We were really talking about getting a bunch of singles, we are not swinging for the fences. There is no big portfolio transaction in our pipeline and if they were offered to is, I don't think we would consider them.

The last thing we are going to do is extend ourselves beyond our capital capacity in the near-term. What we are really doing is pursuing a strategy of recycled capital where we can pull capital allowed at 6%, 7% cap rate range and redeploying it to sort of a immediate double-digit deals, I mean the NDT share repurchase for instances is a great example of something that we can turn on and off, as we choose in relatively right sized amounts. $but we are putting a money out in serious double-digit returns for our shareholders. So those are the types of things we are really talking about rather than anything that's going to catch headlines.

Michael Bilerman - Citigroup

And you talked about this $500 million of sales in the back half of the year, what does that encompass? What are you selling and is that tied in anyway to sort of the other income that you expect to occur in the second half.

Scott Worstein

Yes, it is. I mean significant portion of that are assets that we generate in the merchant building gains that we'll replicate in transactional income from 2007 and the balance of it is essentially what we've always done which is to recycle non-core assets at lower growth rates, so that we can redeploy that capital into higher yields and higher growth opportunity.

Michael Bilerman - Citigroup

And so what’s the development fees. How much in, are those assets already delivered in the portfolio, also out of that 500 how much represents merchant sales?

Scott Worstein

In volume of the 500?

Michael Bilerman - Citigroup

Yes

Scott Worstein

I think it is slightly more than half.

Michael Bilerman - Citigroup

And those assets are already on the book. They are in the core portfolio?

Scott Worstein

Well, they are recently completed developments and qualify for merchant building gain where the work has already been done, the returns are in place and now it is just a matter of executing the exit.

Michael Bilerman - Citigroup

And Ambika had a question as well.

Ambika Goel - Citigroup

If we think about breakdown last year of merchant build up of approximately $0.55 and then promotes of about $0.15 and the expectation is that transactional income will be even with last year. How should we think about the breakdown for 2008 between those buckets?

Dan Hurwitz

I think the promotes would be a bit lower than they were last year. We had a large sale that generated a significant promote last year. I think the merchant build should be relatively comparable, there might be a little bit of an increase in the land sale type stuff to offset some of the difference in the promote.

Ambika Goel - Citigroup

So then on a net basis, how much per share would those two buckets be?

Bill Schafer

We are going to get to a level on a per share basis very comparable to last year's level.

Ambika Goel - Citigroup

Okay. Thank you.

Operator

Our next question comes from the line of Craig Schmidt from Merrill Lynch. Please proceed.

Craig Schmidt - Merrill Lynch

Hi. Thank you. The pick up in transaction of volume in the second half of the year, is this something due to what you see as shift in the marketplace or is it changes that you in DDR, are making yourself?

Scott Worstein

Well first of all, I think it is consistent with what we guided on the last conference call, in terms of timing. So, nothing has changed over the last quarter, but it's certainly more difficult to execute these transactions than it used to be, particularly because the appetite among investors is for core versus value-add, it is less than it was in the past, and that’s something we also discussed on the last call. If we think there is certainly ample of demand to take care of our needs, but it isn't going to be a filling frenzy by any means.

Craig Schmidt - Merrill Lynch

So, it really is in your mind more timing than, less shift in the peoples view where cap rates need to go and so forth?

David Oakes

I guess, a shift from last year is just going to, the relative ease to close transactions in the second quarter to this year, where we would expect more of this in second half. Marketing profit is in place now, meeting to take place, in some cases or in many cases in Las Vegas. And then procedure to close transactions that end up being in the second half of the year. So, I think it’s a change relative to 2007, but not a meaningful change relative to our budget, perhaps the change in pricing relative to 12 months to 18 months ago, but again I don’t think a change relative to where we've expected it to sell various efforts.

Craig Schmidt - Merrill Lynch

Thanks.

Operator

(Operator Instructions). Our next question comes from the line of Jonathan Habermann from Goldman Sachs. Please proceed.

Jonathan Habermann - Goldman Sachs

Hi, it's Jay, Tom is with me as well. Just following up on Craig's last question, just about the capital markets in, and perhaps what we need to see improve to get your sort of third quarter, obviously the big transaction gains there? I mean do we need to really see an improvement overall in credit market activity? And I guess sort of following on that comments, I mean how far apart today do you think sort of buyer and seller expectations are?

Scott Worstein

First of all, I don't think that any change in the credit market is required for us to achieve our goals, and the asset sales that we are talking about in terms of that volume. There are significant amount of equity capital that is not tied to achieving any sensational leverage on these ventures. And frankly if you look at our deals in the past, most of our joint-ventures are leveraged consistently with how our companies leverage, which is in the 50% to 55% loan to value. So, same as we disclosed, a major financing, secured financing in that range is very attractive pricing. I don't think that is going to be the impediment.

I think what you're dealing with and why it takes a little longer in this marketplace is because investors, they are looking at the landscape the same way we are. I mean there is a great talent of opportunities out there, including a tremendous amount of CMBS paper that's in distress, that people think they are going to be able to acquire at a very reasonable prices, and very high yields and there is a lot of vulture activity going around with various plan, around seeing what is going to be available. So people are taking a little bit longer, but there are enough investors out there that are more interested in secured cash flow, just as lenders, that we have worked with. They are more interested in secured cash flow and great sponsorship that will enable us to accomplish our goals. But I think that's the greatest changes, there is a little bit of uncertainty in the market and there is a lot of opportunity in the market. So people with capital are going to be a little slower in making decisions on allocating that capital.

Jonathan Habermann - Goldman Sachs

Well, again the second part of the question, sort of how far apart are buyer and seller expectations at this point?

Scott Worstein

Well, it's very difficult to say, because we haven’t gotten to the point of really having that kind of give and take on these transactions. We’ve just put them on the market basically. I will say, that transaction volume is way down, which indicates that there is greater bid gap than there was in the past among a lot of buyers and sellers. But we haven’t seen any real change in terms of results for the buyers and sellers that have actually made deals.

Jonathan Habermann - Goldman Sachs

Okay. And second question, can you just comment on store closings and what you anticipate perhaps for the balance of the year? Obviously, you did see a pickup in lease termination fee income, but can you comment on what’s happening there? Do you expect more to follow?

David Oakes

Well, I think there will be more to follow. I think there clearly are those tenants in our portfolio that are struggling, and I think we all know who they are. One of the things that we are seeing is tenants struggling in a lot of ways to how best to achieve store closures. Bankruptcy, under the new bankruptcy law is not quite as attractive as it once was. It gives you a lot less flexibility. And unless it's prepackaged, you run a much greater risk of an unsuccessful execution coming out. And a number of these tenants are capitalized by private equity, who really isn’t interested in seeing their equity disappear so quickly. So, I think you are seeing a couple different things.

I think we are seeing the impact of ownerships. I think we are seeing the impact of the new bankruptcy law, which has really held back the flow of bankruptcies. Of course if a tenant that's not in bankruptcy closes, then of course we have the benefit of a negotiation where we can get ourselves a significant terminations and again release the space if we have an alternate user. When we don't have an alternate user the tenants are still obligated to stay in the place and pay rent. But I think it would be imprudent of us not to assume that we will see additional store closures, particularly and they are coming into the summer months when cash positions of retailers is at their annual low and so our sales.

Jonathan Habermann - Goldman Sachs

Okay, and Tom has a question as well.

Tom - Goldman Sachs

Hi, guys. If I am not mistaken the breakup between local and national tenants in your portfolio on a revenue basis is about 10% local and 90% national. Can you provide an update as to how the local tenants are faring relative to national tenants?

Scott Worstein

Well, the local tenants are faring worse. If you look at our increase in bad debt, the bulk of that is coming from the local sort of or regional tenants that don't have the whereabouts to sustain extended downturns or having getting squeezed by their vendors and don't have the cash flow to buy the inventory necessary to maintain their volumes. So most of the pressure that we are seeing outside of the big headline names that we all read that are national companies, most of pressure that we are seeing when we look at our bad debts are coming from the local tenants.

Tom - Goldman Sachs

Okay and if I had just a little bit of color on the dynamics of receiving some sort of lease termination fee from a local tenant when they are in a position of financial distress. How much harder is it to receive something from them versus say a national retailer?

Scott Worstein

It's much harder. It is much harder because they have -- generally they have much less capital. In that particular case if you get something, it's usually not overly meaningful and you would do a transaction with them because if you force them into bankruptcy you will get nothing, in many cases. And if you have another use you are better off just getting an underperforming tenant out of your center.

These are small shops spaces, so they are not overly impactful on a global basis. So, you're not going get the big numbers from them on terminations, but you will be able to typically get something from them to avoid a bankruptcy, in both cases for the landlord and the tenant. For a local tenant in particular, the chance of recovering something on a bankruptcy is very slim. So, we look at those situations a little differently than we look at the nationals.

Jonathan Habermann - Goldman Sachs

Great, thank you.

Dan Hurwitz

Some times, jus to amplify what we will do with the local tenant is we will ask for sign off letter, where these tenant's space continue to pay rent and we go out in market to space while they are there. So that we can re-tenant the space without downtime and they can avoid a claim against them their personal guarantee. That's really the common way to insulate yourself from risk with respect to small tenants.

One of the other things just to follow on that we're seeing, is we're seeing more local tenants that have some interest in staying, but they're just having hard time paying the rent, looking to go on a percentage rent for a period of time at a higher percentage to get them to a period of time where they can start to do sales. June, July are tough months for everybody. So, if you can get them through that period on a rent abatement of some kind and then collect a higher percentage through the holiday season very often we will end up ahead of the game.

Operator

Our next question comes from the line David Toti from Lehman Brothers. Please proceed.

David Toti - Lehman Brothers

Good morning. Just, can you guys provide a little bit of color in terms of where you are seeing pockets of regional strength or weakness?

Dan Hurwitz

Sure. Regional strength today is clearly Washington D.C., its is still a very hot market. Very rarely will we meet with a retailers who does not want to have more locations and more geographic distribution than in the D.C. Metro. Clearly, we are seeing continued strength in New England. If you have opportunities because of the right to build issue is so difficult in New England. We have a lot of tenant demand for our product up to the New England states.

We are seeing some softness in the South. And we are seeing a little softness in the South West, the Phoenix Metros and in Southern California. A little bit of softness compared to where they were, but again, where they were, the baseline was probably not at sustainable level. So they have become, they have come back to the normal a little bit, which for them would be softness but for us would be a little more normal for the rest of the nation.

David Toti - Lehman Brothers

Great. And then just one last question on the development pipeline. There seems to be no change in the current line up. Have you pushed back any shadow projects, shelved anything? Are you intending to show a little bit less of ICSC, any color on that be useful as well?

Dan Hurwitz

We would probably show a little bit less at ICSC in the sense that there are certain projects, not necessarily because of tenant demand, but because of entitlements that might be pushed to a 2010 opening and its very difficult today to get people focused on 2010 and we are certainly going to want to keep people focused on 2009. So we are going to show a lot of our 2009 and early 2010, but it will be a little bit less on the domestic fund and we'll have a little bit more on the international front. So, on blended basis it will probably be very similar to what you've seen in the past.

David Toti - Lehman Brothers

Great. Thank you.

Operator

(Operator Instructions) Our next question comes from the line of Michael Mueller from J.P. Morgan. Please proceed.

Michael Mueller - JPMorgan

Yeah, hi. With respect to the MDT purchase, why was 6.5% the write amount and I guess over the near term is that reasonable to expect that that number could go up?

Dan Hurwitz

The Australian stock exchange requires filings of substantial ownership interest at a 5%, and then each 1 percentage points above that. And so, the 6.5% or actually 6.6% level represents our recent filing with ASX, but where the stock trades today we continue to see it as an attractive investment alternative.

Michael Mueller - JPMorgan

Okay. Switching gears a little bit, in terms of the mix of international versus domestic development deliveries, when you move into 2010, how could that mix shift versus what we see in the supplemental say for 2009?

Scott Worstein

That’s going to shift dramatically, because we will have probably three projects in Brazil and two projects in Russia that will be delivered in 2010. Which would aggregate in dollars probably, this is not our dollars, but in total dollars, close to $400 million to $500 million.

Michael Mueller - JPMorgan

Okay. And of that $400 million to $500 million what’s roughly your stake?

Scott Worstein

50% in Brazil, and 75% in Russia.

Michael Mueller - JPMorgan

Okay. Thanks.

Scott Worstein

Yeah and that also going to include Canada. There could be more international including Canada.

Dan Hurwitz

That is more than 11.

Operator

Our next question comes from the line of [Carol Campbell] from Hilliard Lyons. Please proceed.

Carol Campbell - Hilliard Lyons

Good morning. In the press release you talked about the acquisitions and disposition in the first quarter, do you know what the cap rates were on those?

Dan Hurwitz

On the small volume of disposition, just the two centers, one of them was a great majority of the $8 million; that was in the 7% cap rate range.

Carol Campbell - Hilliard Lyons

Okay. And then, on repurchases, how much did you do in the first quarter and have you done any so far in the second?

Scott Worstein

Share repurchases?

Bill Schafer

No. We have not repurchased any DDR shares during the first quarter or year-to-date in the second quarter.

Carol Campbell - Hilliard Lyons

Okay. Thank you.

Scott Worstein

Thank you.

Operator

Our next question comes from the line of Jim Sullivan from Green Street Advisors. Please proceed.

Jim Sullivan - Green Street Advisors

Good morning. I was confused by a couple of comments, as it relates to the development pipeline. I think you made the comment if I understood that you said correctly that you haven’t pushed back timing of any of your projects, but when I look at the development funding schedule, the numbers seem to tell a different story. At the beginning of the year, your outlook for '08 was about $130 million of funding. During the first quarter, you spent about $20 million. That would suggest you have about 110 left, but the number you show in the first quarter's supplemental half of that $54 million. Can you help me reconcile that where did the other $55 million go?

Bill Schafer

You are comparing fourth quarter supplemental to first supplemental?

Jim Sullivan - Green Street Advisors

On page 42.

Bill Schafer

You are really mixing apples and oranges a little bit, Jim. You are asking when expenditures have been made and comparing that to when deliveries will occur. There isn’t a direct correlation to those two things. Just because expenditures may have fell down slightly doesn’t necessarily mean that the delivery has been pushed back.

Jim Sullivan - Green Street Advisors

I understand the timing, but the amount of funding you expect in ’08 went down by half in a matter of couple of months. It's like something either got pushed back or you’ve taken off the table.

Bill Schafer

While there was certainly an increase in our, I think in this supplement we are saying what’s funded as of March 31, '08 and there was significant funding during the first quarter of '08.

Jim Sullivan - Green Street Advisors

I am looking at the projected funding, the future obligation, we can do it offline if it's all right. It seems like something either got pushed back or taken off.

Bill Schafer

Okay. But I think if you even just look at CIP balance between the end of the year and where we are today it is up a certain amount.

David Oakes

Over a $100 million.

Scott Worstein

That’s between now and the end of the year ago and not what we did in the past.

Jim Sullivan - Green Street Advisors

Yes, I will circle back with you. And then the other topic is, it relates to development that confuse me, when you were talking about 9.5 to 10.25, in think someone said specifically you exclude straight line rents, but when you historically reported your development yields and even in your press release you report a GAAP return. Can you just confirm whether you're talking cash or GAAP and then for your typical project, what might be initial spread between GAAP and cash be?

Scott Worstein

Again we are talking about two of a thing when we evaluate our projects and determine the threshold yield we look at cash on cash return and stabilization unleveraged. When we have to report it and when it comes online then of course we have apply GAAP, which -- what I was trying to explain was that the actual yield that we will be on our books will be higher than the yields that we are quoting for determining our willingness to make an investment.

Jim Sullivan - Green Street Advisors

And what is the typical spread in one of your development projects, your are one between GAAP and cash?

Bill Schafer

The typical spread would be between 75 and a 100 basis points for a power centre or a community center and it is often twice that for a lifestyle center.

Jim Sullivan - Green Street Advisors

Okay that's helpful. And then with respect to the occupancy on your last call, your outlook was flat to down 25 basis points full year so far. Through Q1 you are down 20, are you still looking or you are still projecting flat to down to 25 or something south of that?

Scott Worstein

Now, we're staying where we are because as you look historically at first quarter is usually the weakest quarter because tenants close in the first quarter but they don't open, so historically as you go back we have dropped occupancy in the first quarter compared to fourth quarter and we would expect, to unless again, we have some bankruptcies that don't -- are currently foreseen or budgeted, we would expect our occupancy to remain flat for the year, to down a little bit.

Jim Sullivan - Green Street Advisors

Okay. Thank you.

Operator

Our next question comes from the line of Rich Moore from RBC Capital Markets. Please proceed.

Rich Moore - RBC Capital Markets

Yeah, good morning, guys. Dan, aren't small shop rents generally more lucrative than the national or the regional tenants on say a per square foot basis?

Scott Worstein

Yes.

Rich Moore - RBC Capital Markets

I am struggling a little bit why you feel so great. Sounds like that's where some of the issues are here in, yet you feel still pretty good about what's going on internally, I mean, I guess you are not that concerned maybe about what's happening with small shop guys?

Dan Hurwitz

The small shops make-up a small percentage of the overall portfolio and of that smaller percentage, only a percentage of that percentage is in the distress that's hitting our books. So I think and to be honest, its much easier to lease at least 2500 square foot shop than it is 40,000 square foot store. So the overall perspective is, yes, small shops pay higher rents and it's also true that the replacement tenant usually pays higher rent than the small shop that vacated. And as a percent of the total from a revenue perspective, it doesn't always add up to a meaningful number.

Rich Moore - RBC Capital Markets

Okay, that's good, thank you, but on that I am thinking what does demand like I mean if the small shop guys are hurting something of it in the portfolio, I mean are there guys behind that, that are looking for space, is it kind of what you are seeing?

Dan Hurwitz

There are and there are also smaller national tenants for examples, in the Inland portfolio where we see some softness first from small shops that are used, that we would typically have a national tenant in. So for example there is a big difference when a local sub-shop was out of business and you replace it with subway or a local vitamin store goes out and we replace it with G&C or something like that. So that’s the type of thing that we are doing on a regular basis but overall at tenant demand, if you look at the leasing volume, we were pleasantly surprised with, we were, when you listen to people we are seeing and in Q3 and Q4 of last year and Q1 of this year, we are expecting to see a drop in numbers, and a drop in demand which would have a negative impact on the leasing stretch. And we didn’t see that because we are able to produce a high volume of transactions. And as long as the transaction volumes stays high, we should be able to maintain our occupancy level.

Rich Moore - RBC Capital Markets

Okay. That’s good. Thank you. And then, on G&A, where does that go from here? Do you guys have any thoughts for maybe the second quarter or perhaps the year end in total?

Scott Worstein

Yeah. I read your note your note this morning and you guys noted that there was a significant increase in G&A. Obviously that was almost completely related to the fact that we’ve assimilated the Inland portfolio and we have to increase G&A accordingly. What we really look at is the appropriate metric, which is what G&A is a percentage of total revenue, which includes the wholly owned and the joint venture revenue because as you know we get compensated from our joint venture partners to reimburse us for our overhead in managing those assets. And where that exists and where are we expected to be for the year is somewhere in the 4.5% to 4.75% range, which is pretty consistent with historical levels and that does include the outperformance plan that we announced in the last conference call, which is not a huge number but it is a number that registers in that percentage.

Rich Moore - RBC Capital Markets

Okay. Good. Thanks, Scott. And then also when you look at your guidance for the year, how do you guys think about LIBOR, to be honest that's just bouncing all over the place and how does that factor into what you guys are thinking?

Bill Schafer

Well, right now obviously, you have one month LIBOR, I think today it is in the 2.9%, it's been down to sub-2.7% and so forth. And right now, we are viewing that is basically in the high twos that’s where LIBOR is, I think in two and three quarter 3% range.

Rich Moore - RBC Capital Markets

Okay. Bill, so, you think that for the rest of the year is what gets you to your interest expense?

Bill Schafer

I think, right now probably if you look at everything, you are probably looking at about a two and three quarter number.

Rich Moore - RBC Capital Markets

Okay. And the effect of hedges, if I'm correct on this, the effect of hedges goes through the interest expense line, is that right, or does it go through OCI?

Bill Schafer

Yeah, for example we have fixed the number of some of our floating rate debt in prior years, that fixed rate goes through our income statement to the extent that there are adjustments in what those contracts are that would basically go through OCI, because an indicator will be affected through interest going forward. So as of the rates go down there could be to a extent we fixed certain rates, there be an increase maybe in the obligation there which will go through OCI. But then as you pay that interest expense going forward that brings it down, because it runs through our interest expense line item.

Rich Moore - RBC Capital Markets

Okay. Very good, thank you guys.

Operator

(Operator Instructions) We have a follow-up question from the line of Michael Bilerman from Citigroup. Please proceed.

Ambika Goel - Citigroup

Hi, this is Ambika. What amount of assets are currently on the balance sheet that could generate gains?

Bill Schafer

I mean I would say most of the assets are on the balance sheet.

Scott Worstein

You are talking about merchant build gains..

Bill Schafer

If we look at what's stabilized from the development pipeline over the past several years are going to lease up. Profit in the past several years, there would comfortably the several hundred million dollars, that has stabilized recently that would be eligible this year in addition to some projects potentially that still show up in the current development pipeline if they are going through their final development stage that could also be eligible.

Ambika Goel - Citigroup

If we think about the $215 million, what years did these projects stabilize in?

Bill Schafer

I would say those projects stabilized in the past 12 months to at most 18 months.

Michael Bilerman - Citigroup

What's your policy in terms of how long you'll hold an asset that you delivered or are you going to sell and generate a gain? And how is that processed in terms of when you fist decide you will bring something back and stop depreciating it, just help us to sort of get a grasp around that?

Bill Schafer

Re-accruals would required that an asset has to be held for four years, post its initial stabilization, to be sold and not generate a significantly negative tax impact, through our TRS. There are ways to shorten that period that obviously very large number of companies engage in, but the reality is for our exact sort of development project, there is a multi-quarter or even multi-year stabilization process to get to that final stabilized occupancy before we would view an asset as having completed its development value creation.

Michael Bilerman - Citigroup

And is there a specific level of occupancy that one, that DDR considers asset stabilized?

Bill Schafer

Well, we typically consider an asset stabilized at 95% occupancy. But I think one of the, what Michael just asked, is problematic is a criteria to determine merchant building gain, vis-à-vis whether they are going to depreciate or not, because there are some of our projects come online over a long period of time. They are phased over several years and the project is still a development project, sometimes five years after the first tenant opens. It doesn’t stop becoming eligible for merchant building gains accordingly. I mean, I can think of a great example of that would be our project in Coon Rapids, Minnesota probably took six or seven years from the opening of the first store to last store to fully stabilize that asset. But we still had a significant amount of that asset and the development pipeline lift and we still had land to build out and lease.

Michael Bilerman - Citigroup

Did you take that asset into the core and depreciated in light of…?

Bill Schafer

Part of it, yes, and part of it, no. It depends.

David Oakes

But the gain that was booked was on any case, was relative to an undepreciated basis.

Michael Bilerman - Citigroup

So you are saying right now, you probably have $600 million to $700 million of assets in the core portfolio that could generate gain of which you are going to sell 250 in the back half of the year.

Dan Hurwitz

Yeah. I think we have comfortably several hundred million dollars of assets that if delivered over the past several years we have had initial deliveries and it stabilized in the past year or so.

Michael Bilerman - Citigroup

Does that include any acquisitions you did?

Scott Worstein

It's the acquisition were incomplete at the time that they were acquired than they would. I mean there was a bunch of stuff at JDN that still hasn't been developed and there is a bunch of stuff in Inland that still hasn't been developed. So yes that does include assets like that.

Michael Bilerman - Citigroup

Then how do you decide whether something is merchant build versus development hold and in that does the termination change from initial to…

Scott Worstein

We don't decide that, Michael, until it's been in the portfolio long enough to be an investment asset. I mean we maintain the flexibility to make it a merchant build again as long as it qualifies but sometimes but we also don't maximize our merchant building gains by selling every asset that qualifies for that because that would cause our earnings to be too lumpy. So every year, there is probably hundreds of million dollars of assets that could have been harvested that haven't been, that have moved into the investment category that now it's too late.

Michael Bilerman - Citigroup

Right.

Scott Worstein

That's why you know when you guys asked the questions, we don't keep the running list of this on a quarterly basis in disclosures and what we are really focused on is that when we do our budgets in October, we will look at everything that tell us all that time and then we will choose from among that list those assets that we target to harvest during the coming year to achieve the gains that we really want to achieve during that year. And then during that year there will be projects that are added to the list and projects that will come afterwards.

Michael Bilerman - Citigroup

Why wouldn't you put that list out?

Scott Worstein

First of all I don't think anybody does and it's just something. We are ready to provide more disclosure on these items than anybody in the industry and I think its enough.

Dan Hurwitz

And I think it ends up being a function of the lease-up and what ends up in certain specifically, what's ends up in terms of certain tracts that could be sold to retailers versus lease, and so there are number of items that economically may end up comparable to the company, but it would impact our interest in selling or holding assets. I think our opportunities set on investment side. It also determines our desire to recycle some capital out of recently developed project in some cases or not in other environment.

Michael Bilerman - Citigroup

Just last question, how you are marketing these portfolios? Are you selling the merchant build to 250 as one sort of portfolio and then the non-core stuff in the single assets or in terms of your marketing process?

Dan Hurwitz

Today we are for the most part of marketing individual assets or very small portfolios as the way we see, the way to capture the largest number of potential bidders or buyers based on where the credit market stand today. The smaller loans, $50 million to $100 million loans, on $100 million to, $200 million assets, so that's 50% loan to value is much more available than the $500 million loan, on the $1 billion portfolio despite the exact same coverage ratios and other credit metrics and so I think we want to be sensitive to where the market stands today and end up with a larger volume of smaller transactions.

Michael Bilerman - Citigroup

Okay. Thank you.

Operator

Thank you for your participation in today's conference. This concludes the presentation. You may now disconnect. Have a good day.

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Source: Developers Diversified Realty Corp. Q1 2008 Earnings Call Transcript
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