The investment sales market on retail real estate has been frozen for a while. Sales volumes are down in 2009 from 2008. During the first quarter, $1.8 billion in transactions occurred on retail properties, a drop from the year earlier. Overall in 2008, $20 billion in transactions occurred on properties worth $5 million or greater--down 70 percent from 2007.
But could things turn now that a very large portfolio is hitting the market? Macquarie DDR Trust, a joint venture between Aussie-based Macquarie and U.S. retail REIT, Developers Diversified Realty Corporation has put a portfolio of 52 U.S. shopping centers up for sale.
As of Dec. 31, 2008, MDT said the portfolio of assets were valued at $1.9 billion, which accounts for 70.4% of the Trust's total asset value. MDT first foreshadowed this portfolio listing when on Mar. 19, it said MDT's intentions were to "reorganize and simplify" its ownership in certain joint venture interests. The trust is considering purchasers interested in a limited 85.5% ownership interest or 100% interest in the portfolio.
The big question: Will the portfolio actually fetch $1.9 billion or will it get less than that? For example, the recent forced sale of John Hancock Tower wasn't very encouraging. The building changed hands for 50 percent discount on what the same property fetched in 2006.