Mike, ROE is one of the great mis-used metrics in my view. It is...

Mike, ROE is one of the great mis-used metrics in my view. It is return on 'newly' retained equity people should really look at.
By way of explanation, David Dicker has committed to paying out 100% of profits as dividends, unless the company has a pressing capital need.
To that end, in order for a company paying out 100% of profits to retain an ROE at the same level, all they really need do is not reduce profits. I would hazard the ROE of above 40% for DDR is likely to remain high, or even go higher over the next couple of years as the expanded warehousing capacity grows profits and all profits are returned to shareholders.
It is in this way that companies with high payout ratios often retain high ROE's despite turgid results.
10 years ago, Telstra earned 32.6 cents per share and had an ROE of 27%. Over the last 10 years, TLS has averaged 30.15c EPS & this year had EPS of 30.6c (yep, 6.1% lower than 2003). Despite what can only be described as a disappointing decade of results, ROE is now 30.2% (up 3.2%).
How was this achieved? By paying out 98.2% of profits over the period and a marginal reduction in outstanding shares, funded by an increase in gearing.
So just remember, good results are not necessarily needed to maintain high ROE... - Eternalgrowth