Developers Diversified Realty Corporation forms joint venture with Ohio State Teachers Retirement Systems.

CLEVELAND--(BUSINESS WIRE)--Sept. 9, 1996--(NYSE-DDR) Developers Diversified Realty Corporation has entered into a joint venture relationship with Ohio State Teachers Retirement Systems (OSTRS) involving the ownership and management of certain shopping centers. Upon the formation of the joint venture, two shopping centers, Macedonia Commons located in Macedonia, Ohio and Belden Park Crossings located in Canton, Ohio, which were both developed by DDR were the first properties to be transferred to the joint venture. The two wholly owned shopping centers aggregate 718,269 sq. ft. of gross leasable area, of which 480,269 sq. ft. is Company owned.

The properties were transferred to the joint venture (which is 50% owned by OSTRS and 50% owned by DDR) at a projected valuation of $50.6 million. DDR's total cost basis in the properties, before depreciation, is approximately $42.5 million. The transaction, therefore, evidences a value creation of $8.1 million by DDR and a profit margin of 19% over cost.

In conjunction with the formation of the joint venture, OSTRS funded an initial cash contribution of $11.4 million and is obligated to fund an additional contribution upon the final lease-up of 16,000 sq. ft. at Belden Park Crossings. The properties will be financed by a $25 million non-recourse mortgage loan. OSTRS capital contribution, coupled with the $25 million mortgage loan will repay $37 million of DDR's initial $42.5 million cost basis in the properties, leaving DDR with a $5.4 million equity investment in the joint venture. DDR will continue to manage the properties and will receive management fee income from the joint venture. DDR's return on its equity investment in the joint venture, including management fee income, will approximate 31% per annum.

Prior to the formation of the joint venture, the two joint venture properties were encumbered by secured variable rate mortgage debt aggregating $36.4 million. The formation of the joint venture will therefore result in a reduction of $36.4 million in secured variable rate indebtedness from DDR's balance sheet.

Commenting on the formation of the joint venture, Scott A. Wolstein, President and Chief Executive Officer of DDR, stated that "this transaction boldly demonstrates DDR's ability to create value for its shareholders with its development capabilities. The OSTRS joint venture also demonstrates an added dimension to DDR's financial flexibility through its ability to attract significant equity capital on a transactional basis from such a large, quality, experienced real estate investment organization as OSTRS."

DDR is currently developing new shopping centers in Boardman, Ohio and Stow, Ohio as well as a phase II development at Belden Park Crossings, all of which are scheduled to be transferred to the OSTRS joint venture upon completion.

Developers Diversified Realty Corporation is a self-administered and self-managed Real Estate Investment Trust ("REIT") operating as a fully integrated real estate company which acquires, develops, owns, leases, and manages shopping centers and business centers.

CONTACT: Developers Diversified Realty Corporation, Cleveland

Scott A. Wolstein, 216/247-4700