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Salomon Smith Barney March 2003

Salomon Smith Barney March 2003. Section I. Corporate Overview and Financial Performance. DDR’s Mission Statement. The leading owner, developer and manager of market-dominant community shopping centers . . .

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Salomon Smith Barney March 2003

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  1. Salomon Smith BarneyMarch 2003

  2. Section I Corporate Overview and Financial Performance

  3. DDR’s Mission Statement The leading owner, developer and manager of market-dominant community shopping centers . . . . . . provides the very best environments for the nation’s most successful retailers . . . where retailers can offer the most convenient shopping experience for their customers at an affordable cost.

  4. Company Features (1) Pro forma 1Q2003. (2) Includes properties owned and managed as of March 2003. Does not include DDR’s 38 industrial and office properties. (3) Includes managed properties and unowned anchors at company-owned shopping centers as of March 2003.

  5. Enhanced National PresencePost-Merger Operating Portfolio GLA under Managementby State Less than 500,000 SF 500,000 – 1.0 MSF +1.0 – 2.0 MSF +2.0 MSF Strengthens leasing relationships with leading retailers and maximizes operating efficiency. 2.8 msf (3.6%) 3.1 msf (4.1%) 8.5 msf (11.1%) 2.2 msf (2.8%) 2.6 msf (3.4%) 3.5 msf (4.6%) 2.6 msf (3.4%) 2.4 msf (3.2%) 2.2 msf (2.9%) 76 MSF / 44 States 2.9 msf (3.8%) 2.1 msf (2.7%) 7.3 msf (9.5%) 4.0 msf (5.2%) 5.9 msf (7.7%)

  6. Enhanced National PresencePost-Merger Operating & Development Portfolio DDR Existing Properties Multiple Center Markets Service Merchandise Properties Multiple Services Merchandise New Developments Managed Properties JDN Operating Properties Development Properties

  7. 5 9 8 3 4 6 11 2 1 7 10 14 12 13 National Presence DDR’s Regional Offices Development Leasing Operations Leasing & Operations Leasing, Development & Operations Coventry Real Estate Partners 1. Long Beach, CA - Development 2. Sherman Oaks, CA -Leasing /Operations 3. Salt Lake City, UT - Leasing /Develop. /Operations 4. Denver, CO - Leasing 5. Minneapolis, MN - Operations 6. St. Louis, MO - Leasing /Operations7. Atlanta, GA – Leasing8. Cleveland, OH - Corporate Headquarters 9. New York, NY - Coventry Real Estate 10. Dallas, TX - Leasing 11. Durham, NC – Operations12. Tampa, FL - Operations 13. Tampa, FL - Leasing 14. Orlando, FL – Leasing

  8. DDR Business Plan • Focus on the ownership and management of high-quality market-dominant community shopping centers • Cultivate premier relationships with the nation’s • leading retailers • Proactively replace underperforming tenants at significantly higher rents • Maximize revenue generation from existing centers • Expansion and redevelopment • Ancillary income sources

  9. DDR Business Plan • Recycle capital at positive spreads • Opportunistic acquisitions • Development of infill sites in major markets • Engineer innovative JV structures with institutional capital partners • Additional equity source • Maximize returns on invested equity

  10. Stock PriceDoublesIPO Price Historical Stock Price 2x1 Stock SplitAugust 1998 ($21.99)

  11. Outperformance During Recession 2002 Total Returns DDR RMS DJIA S&PMid Cap S&P Small Cap Russell 2000 S&P500 NASDAQ

  12. DDR v. Russell 2000 v. S&P 500 $10,000 invested at IPO in 1993 . . . Compound Annual Total ReturnDDR 15.7%S&P 500 9.2%Russell 2000 4.5% $42,464 $24,016 $15,464 S&P500 Russell2000 DDR

  13. DDR v. Morgan Stanley REIT Index $10,000 invested in 1996 . . . Compound Annual Total Return DDR 11.7% RMS 5.7% $19,402 $13,944 DDR RMS

  14. FFO (diluted) / Share Dividends / Share $2.70(2) $1.64 (Estimated) Consistent FFO and Dividend Growth(1) Based on analyst’s estimates for 2003,FFO will have more thantripled & dividends willhave more than doubledsince IPO. Common share dividendpayout ratio has declined from 82% in1993 to approximately 60% budgeted for 2003. Retained cash flow wasover $40MM in 2001, approximately $50MMin 2002, and is estimated to exceed $50MM in 2003. (1) Adjusted to reflect a 2:1 stock split in 1998.(2) Based on current First Call consensus estimates.

  15. Historical Price/FFO Multiple DDR Avg. Multiple = 10.0

  16. 9%Avg. Increase on Renewals 23% Avg. Increase on New Leases Internal Growth: Leasing Spreads Weighted Average Renewals New Leases

  17. Lease Revenues Expiring Lease Revenues Subject to Steps Internal Growth: Releasing & Contractual Rent Steps Average Rent Spread on Releasing 12.0%-16.5% Average Contractual Rent Step 7.6% Lease Revenues (Millions)

  18. 2002 Capital Recycling Retail Property Acquisitions & Dispositions Acquisitions(1) Dispositions Total Dispositions - $313 millionDDR’s pro rata share - $143 millionTotal SF – 2.3 MSFWtd. Avg. Cap Rate – 9.0% Total Acquisitions - $538 millionDDR’s pro rata share - $387 millionTotal SF - 4.8 MSFWtd. Avg. Cap Rate – 10.0% Developments – Completed Net Project Cost - $185 millionDDR’s pro rata share - $85 millionTotal SF – 2.0 MSFWtd. Avg. Unleveraged Cash on Cost Return – 11.5% (1)Includes three acquisitions made in January 2003.

  19. DDR Total Returns 2002 – 23.4% 2001 – 56.7% 2000 – 14.7% Annualized 3 Year Total Return (2000 - 2002)

  20. FFO Growth Rates 2001-2003 2001 - - 2002 - - 2002 2003 DDR 5.0% 8.0% FRT -4.0% -1.1% KIM 1.3% 4.6% NXL 1.1% 2.7% REG 4.7% 4.5% WRI 7.2% 5.5% Source: First Call (as of 3/7/02)

  21. FFO Multiple / FFO Growth Rate(1) (1) FRT (-14.17) not listed.

  22. Overall Ranking Company’s Rank (Best to Worst) according to Total Return, FFO Growth & FFO Multiple/FFO Growth Rate

  23. Consistent Outperformance DDR continues to offer income at a favorable value, outperforming expectations for the REIT industry Salomon Smith Barney REITUniverse DDR Assumes DDR stock price of $22.75 per share.

  24. Section II Retail Industry Overview

  25. Shifts in Consumer Preferences DDR is well positioned to benefit from long-term trends in the retail industry: From traditional department stores to discount department stores From enclosed mall anchors and specialty tenants to community shopping center discounters From neighborhood groceries to supercenters

  26. Shift to Discount Department Stores Discount department stores capture market share at the expense of traditional department stores Percent of General Merchandise Sales Source: U.S. Census, Property & Portfolio Research.

  27. Sears May Co. JC Penney Federated Nordstroms Saks Retail Market Cap Analysis(in Billions, as of 4Q02) Wal*Mart’s market cap alone is seven times larger than that of the entire traditional department store sector Traditional Dept. Store Total: $33 Billion Discount Dept. Store & Home Improvement Total: $369 Billion $7 $6 $6 $9 $3 $2

  28. Shift to Community CentersRetailers’ Same Store Sales – Last 24 Mos. Community Ctr – Discount Dept Stores 4.5%Power Ctr – Hard Goods/Big Box Retailers 4.2% Community Ctr Retailers 4.1% Mall Anchors -2.4% Mall Specialty Retailers -3.6% 15% 10% 5% 0% (5%) (10%) Source: Merrill Lynch “Same Store Sales Monitor” (15%)

  29. Shift to Grocery Supercenters Traditional grocers’ market share of U.S. grocery sales dropped from 85% in 1992 to approximately 40% in 2001 Supercenter and wholesale clubs represented over 30% of retail grocery sales in 2001 Wal*Mart’s grocery sales of $65 billion in 2001 topped Kroger’s sales of $50 billion, making it the largest grocery retailer in the country Source: Supermarket News, ICSC, USA Today.

  30. Wal*Mart Growth in Supermarket Sales Wal*Mart’s supermarket and pharmacy-related sales growth is expectedto increase more than 5x faster than other industry participants’ sales Growth in Sales(Percentage) Source: Goldman Sachs; September 25, 2002.

  31. Wal*Mart Pricing AdvantageSupermarket Related Sales On a sample shopping trip, Wal*Mart’s supercenter prices registered 22% below the market average Avg. Premium to Wal*Mart Prices Source: Goldman Sachs; September 25, 2002.

  32. Wal*Mart Pricing AdvantageGeneral Merchandise Sales On a sample shopping trip, Wal*Mart’s general merchandise prices registered 28% below the market average Avg. Premium to Wal*Mart Prices Beauty Source: Goldman Sachs; September 25, 2002.

  33. Growth in Retail Supply (Per Capita) v. Retail Sales (Per Capita) Over the last 20 years, retail sales per capita has grownat a higher rate than retail square feet per capita Index 1982 = 100 2001 Source: Economy.com, Portfolio & Property Research.

  34. Growth in Retail Supply (Per Capita) v. Retail Sales (Per SF) Based on the growth of retail sales per square foot, the utilityof additional retail space is increasing at a similar rate Index 1982 = 100 2001 Source: Economy.com, Portfolio & Property Research.

  35. Section III Portfolio Overview

  36. Community Center Portfolio DDR’s investment strategy is to own and operate market dominant community centers that draw shoppers from the immediate neighborhood as well as the surrounding trade area. 250,000 - 1,000,000 square foot, open-air shopping centers 2 or more strong national tenant anchors such as Wal-Mart, Kohl’s, Target, Home Depot, or Lowe’s 2 or more medium-sized national big-box tenants such as Best Buy, Bed Bath & Beyond, TJ Maxx, or Michael’s 20,000 - 80,000 square feet of small shops 2 - 4 outparcels available for sale or groundlease

  37. Post Merger Reliance on Major Tenants(1) Owned Locations Percent Total Base Rent Credit of Total Ratings Units Tenant (millions) Wal-Mart/Sam’s Club 29 $15.89 4.2% AA/Aa2 Lowe’s Home Improvement 16 $15.66 4.1% A/A3 Kohl’s 34 $12.46 3.3% A-/A3 T.J. Maxx/Marshall’s 51 $9.39 2.5% A/A3 PetsMart 39 $7.98 2.1% B+/Ba3 Best Buy/Musicland Group 28 $7.91 2.1% BBB-/Baa3 OfficeMax 37 $7.47 2.0% NR/NR Bed Bath & Beyond 32 $7.09 1.9% BBB-/NR AMC Theater 5 $5.90 1.5% NR/B2 Kroger 17 $5.70 1.5% BBB-/Baa3 Michael’s 28 $5.09 1.3% BB/Ba1 Gap/Old Navy/Banana Rep. 31 $4.81 1.3% BBB-/Ba3 Barnes & Noble 33 $4.75 1.2% BB/Ba3 Linens ‘N Things 13 $4.19 1.1% NR/NR Toys “R” Us 16 $3.66 1.0% BBB/Baa3 Subtotal 409 $117.94 31.0%Total $390.40 100.0% (1) Based on actual pro rata ownership of real estate assets, calculated on owned shopping enter GLA only. Also includes tenants in Service Merchandise portfolio.

  38. Post Merger Major Tenants by % of Base Revenues(1) State DDR JDN Pro Forma 1. Wal*Mart/Sam’s Club 4.0% 4.8% 4.2%2. Lowe’s Home 1.6 12.0 4.1 Improvement 3. Kohl’s 2.8 4.7 3.3 4. T.J Maxx/Marshall’s 2.4 2.8 2.55. PetsMart 1.9 2.8 2.1 6. Best Buy/Musicland 2.3 1.5 2.1 7. Officemax 2.1 1.4 2.0 8. Bed Bath & Beyond 2.5 --- 1.99. AMC Theater 2.0 --- 1.510. Kroger 1.0 3.1 1.5Total 22.5% 33.2% 25.1% (1) Based on pro rata share of joint venture assets.

  39. Post Merger Major Tenants by GLA Owned and Unowned Locations TotalUnits Total SF(Millions) Owned Units Non -Owned Units Tenant 1. Wal-Mart/Sam’s 84 12.1 29 552. Lowe’s Home Improvement 30 3.8 16 14 3. Target/Mervyn’s 25 2.9 5 20 4. Home Depot 23 2.3 6 17 5. Kohl’s 35 2.1 34 1 6. T.J. Maxx/Marshall’s 51 1.7 51 0 7. Kmart 17 1.5 15 2 8. Kroger 20 1.2 17 3 9. Best Buy/Musicland 29 1.1 28 1 10. Bed Bath & Beyond 32 1.0 32 0

  40. Post Merger Geographic Distributionby % of GLA(1) State DDR JDN Pro Forma 1. Ohio 14.3% 1.1% 11.1%2. Georgia 1.9 32.9 9.5 3. Florida 8.2 6.4 7.7 4. Texas 5.0 5.6 5.25. California 6.2 --- 4.6 6. Michigan 4.2 3.9 4.1 7. South Carolina 4.5 1.9 3.8 8. Minnesota 4.8 --- 3.69. Utah 4.5 --- 3.410. Missouri 4.4 0.4 3.4Total 58.0% 52.1% 56.5% (1) Total square feet under management. Assumes 100% ownership of joint venture assets.

  41. Received 630,000 sf in 12 twelve locations in April and July of 2001 By year-end 2001, DDR had nearly 550,000 sf leased or under LOI, representing the recapture of 100% of the HomePlace rent Case Study: HomePlace Retenanting DDR has consistently demonstrated its ability to quickly and profitably re-tenant space left from bankrupt tenants

  42. Months to Re-lease (1) % Increase in Rent New Tenants Center HomePlace Retenanting Phoenix, AZ Ashley’s Furniture 2 82% The Oak Store 12Denver, CO Cost Plus 5 68% Loehmann’s Furniture 7 Maple Grove, MN Bed Bath & Beyond - 0 - 44% Michael’s 2Canton, OH HHGregg - 0 - 38% Arhaus 8 Portland, OR Famous Footwear 5 27% Linens N’ Things 6N. Olmsted, OH Bed Bath & Beyond - 0 - 24% Pier One 5 (1)From lease rejection date to final lease execution. Letters of intent are typically signed 30 to 90 days prior to lease execution.

  43. Months to Re-lease (1) % Increase in Rent New Tenants Center HomePlace Retenanting St. Louis, MO Bed Bath & Beyond - 0 - 21% David’s Bridal 8Marietta, GA Ross Dress 6 17% Cargo Furniture (Pier 1) 12Atlanta, GA Sports Authority 9 14%Columbus, OH Michael‘s 8 11% Dress Barn 11 The Avenue 11Eagan, MN Bed Bath & Beyond - 0 - 7% PetsMart 10 San Antonio, TX OfficeMax 9 4% (1)From lease rejection date to final lease execution. Letters of intent are typically signed 30 to 90 days prior to lease execution.

  44. Shop Space Total Portfolio Average Annualized Base Rental Rates(as of 4Q02) $15.18 $10.58

  45. Historical Occupancy Rates DDR has averaged nearly 96% occupancy since 1987

  46. Leasing Disposition Service Merchandise(as of 4Q02) Capital Structure Portfolio DDR (24.6%) $19.5 Klaff Realty (12.3%) 9.7Lubert Adler (61.6%) 48.6Special Member (1.5%) 1.3Total Capital $79.1Actual Debt $89.6Anticipated Debt 66.3Total Debt & Equity $235.0 Fee Interests Sold, Leases Assigned, Direct Leases and Subleases 130 Leases Expired or Rejected 76Vacant or Partially Leased 70 Major Tenants PetsMart Best Buy Circuit CityA.C. Moore Value City FurnitureDSW Shoe WarehouseTJ Maxx/MarshallsBed Bath & BeyondDollar Tree Fees to DDR Management Development

  47. Section V DDR/JDN Merger Overview

  48. Traffic Generating Anchors(1) • 75% of DDR assets and approximately 55% of JDN assets have either a discount or traditional department store • 50% of DDR assets and approximately 40% of JDN assets have a grocery component • 40% of DDR assets and over 20% of JDN assets have both a home improvement store and a discount or traditional department store • Over 45% of DDR revenues and over 60% of JDN revenues are generated by short term leases to specialty store tenants • (1)Includes unowned anchors

  49. Highly Accretive Use of DDR Stock Overall capitalization rate of 9.8%, or 10.6% after adjusting for the impact of non-income producing land assets Estimated annual accretion of 5% reflects dilutive impact of land assets Further accretion potential as development is completed and pipeline is built out However, anticipated sales of certain non-core retail assets will dilute total accretion

  50. Land and Development PortfoliosProvide Future Upside DDR uniquely qualified to incorporate JDN’s development portfolio into its existing operations Properties currently under development create embedded growth DDR’s strong tenant relationships will enhance the profitability of the development pipeline Potential sale of land and outparcel portfolio, comprised of over 600 acres, provides additional opportunity to raise capital accretively

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