We analyze the spectrum of the exactly duality and gauge invariant higher-derivative double field theory. While this theory is based on a chiral CFT and does not correspond to a standard string theory, our analysis illuminates a number of issues central in string theory... The full quadratic action is rewritten as a two-derivative theory with additional fields. This allows for a simple analysis of the spectrum, which contains two massive spin-2 ghosts and massive scalars, in addition to the massless fields. Moreover, in this formulation, the massless or tensionless limit $\alpha'\rightarrow \infty$ is non-singular and leads to an enhanced gauge symmetry. We show that the massive modes can be integrated out exactly at the quadratic level, leading to an infinite series of higher-derivative corrections. Finally, we present a ghost-free massive extension of linearized double field theory, which employs a novel mass term for the dilaton and metric. (read more)