Macquarie DDR portfolio put up for sale

The $1.9bn listed joint venture between Macquarie and Developers Diversfied Realty is selling roughly two-thirds of its shopping centre assets as the company struggles amid a declining retail market.

Macquarie DDR Trust, the listed joint venture between Macquarie and Developers Diversfied Realty, is selling more than half its shopping centre portfolio following a strategic review of the firm.

The real estate investment trust is planning to dispose of more than 52 properties across 20 US states, in a deal valued at $1.9 billion as of December last year. Macquarie DDR Trust (MDT) has 80 properties in total with an average cap rate of 7.2 percent.

MDT said last December it was launching a strategic review of the trust after its share price fell more than 90 percent over the 12 months. At the time, MDT said it would consider “asset sales and entity-level sales” as well as selling the trust wholesale to investors.

MDT has been battered by the declining retail market. In 2008, two of its largest tenants, Mervyns and Circuit City, both filed for bankruptcy protection. Mervyns, the discounted department store, was MDT’s largest tenant, accounting for 10 percent of retail income. MDT also has $148 million of debt, secured by 18 assets, set to mature in June this year.

Holliday Fenoglio Fowler, Macquarie Capital Advisers and UBS Securities are advising on MDT’s strategic review and sale of the 52-property portfolio.

In a statement, HFF said the portfolio totaled 12.5 million square feet and had an average occupancy of 88.5 percent. Major tenants include Walmart, BJ’s Wholesale Club, Bed Bath & Beyond, Best Buy, TJ Maxx, Kohl’s and Dick’s Sporting Goods.