Wall Street Watch

Approximately $1.1 Billion of Securities Affected

New York, October 07, 2002 -- Moody's Investors Service has confirmed the Baa3 senior unsecured debt ratings of Developers Diversified Realty Corporation (DDR) and concurrently changed the rating outlook to negative, from stable. This rating action follows the announcement on October 4, 2002 that DDR has reached a definitive agreement with JDN Realty Corporation to acquire JDN for approximately $1 billion in stock and assumed debt. The acquisition is expected to close following shareholder vote to approve the transaction in late 2002, or early 2003.

According to Moody's, this rating action reflects risks stemming from the acquisition including increase in near-term leverage, heightened development exposure, asset concentration in certain markets and increased exposure to weaker tenants. At the same time, the rating agency recognizes the strategic benefits of this transaction given the fit between the two companies' development focused operating strategies and the opportunity to refinance over time JDN's portfolio with less expensive capital. However, given JDN's higher levels of overall debt, especially secured debt, credit statistics of DDR immediately following the acquisition will decline. Moody's also notes that DDR's overall development exposure will rise with the addition of JDN's development pipeline, increasing the REIT's risk profile given the more challenging retail environment. Moody's expects DDR to take steps to reduce the leverage assumed in the acquisition through asset sales, and to refinance JDN's secured line of credit on an unsecured basis. DDR is also likely, in Moody's view, to address the risks associated with its increased development exposure, as well as to manage the risk profile of the evolving portfolio as it relates to geographic concentration and tenant exposure.

Change in the rating outlook to stable, from negative will depend upon the REIT's ability to successfully integrate JDN's portfolio without increasing leverage, and without raising the risk profile of its portfolio.

The following ratings were confirmed:

Developers Diversified Realty Corporation -- Senior unsecured debt at Baa3; senior unsecured debt shelf at (P)Baa3; subordinated MTN shelf at (P)Ba1; preferred stock at Ba1; preferred stock shelf at (P)Ba1.

Developers Diversified Realty Corporation [NYSE: DDR] is a REIT based in Cleveland, Ohio, USA. DDR currently owns and manages approximately 345 retail properties in 43 states totaling in excess of 62 million square feet of real estate. As of June 30, 2002 DDR reported consolidated assets of $2.6 billion, and common share equity of $1.5 billion.

New York
Philip Kibel
Vice President - Senior Analyst
Real Estate Finance Group
Moody's Investors Service
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

New York
John J. Kriz
Managing Director
Real Estate Finance Group
Moody's Investors Service
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

Copyright 2002 by Moody's Investors Service
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