CLEVELAND-Developers Diversified Realty said during a Q2conference call report Tuesday that retailers are succeedingdespite grumpy consumer demand, and therefore malls are doingbetter than expected. The company posted an FFO loss, but saidsame-store NOI was up 1.5% for the quarter.

The FFO loss for Q2 2010 was $32.8 million, or 13 cents pershare, compared to a loss of $166.5 million, or $1.15 per share ayear ago. The net loss for the quarter was $97.1 million, or 39cents per share, compared to a net loss of $237.2 million, or $1.64per share, in Q2 2009.

However, President and CEO Dan Hurwitz said this past quarterfeatured the first evidence of positive leasing spreads andpositive same-store NOI growth since the beginning of the financialcrisis. On the asset sales front, DDR sold $100 million ofnon-prime assets since March 31. “We continue to focus on pruningthe portfolio of underperforming properties and enhancing theoverall quality of our prime portfolio,” Hurwitz said. “We believethat current environment provides a unique opportunity to sell intothe market at more favorable terms, and therefore we will continueto accelerate non-prime asset sales where prudent even thoughdilutive to near term FFO and therefore also expect to exceed ouryear-end budget of $150 million of dispositions.