As we wrote about last week, Benderson Development made headlines by buying back 11 properties it had sold to Developers Diversified Realty (DDR) in 2004. 8 of the shopping centers are in Western New York (1 in the city and 7 in the suburbs) and combined the 11 plazas account for 3 million square feet.
This transaction is notable as it is one of the first to begin to quantify the declines in commercial real estate values. The Retail Traffic blog we cited last week has done some more work to detail Benderson’s latest trade and it reveals just how far commercial real estate prices have fallen. The WNY plazas appreciated across-the-board from 2004-2007 but, following the devastating credit crisis of 2008, property values were substantially lower in 2009 than 2004. The only city property included in this transaction – the Marshall’s Plaza on Delaware Avenue – declined in value a jaw-dropping 45% from 2004 to 2009.
Assets sold in 2004 and 2007
- Tops Plaza, 67,992 sq. ft., April 2004, $6.5M, $96 per square foot
- Tops Plaza, 67,992 sq. ft., April 2007, $8.9M, $131 per square foot
- Hamburg Village, 92,934 sq. ft., April 2004, $8.9M, $96 per square foot
- Hamburg Village, 92,934 sq. ft., June 2007, $12.8M, $138 per square foot
- University Plaza, 162,686 sq. ft., April 2004, $15.6M, $96 per square foot
- University Plaza, 162,686 sq. ft., June 2007, $16.6M, $102 per square foot
- Tops D&L Plaza, 148,245 sq. ft., April 2004, $14.2M, $96 per square foot
- Tops D&L Plaza, 148,245 sq. ft., June 2007, $15.1M, $102 per square foot
Assets sold in 2004 and 2009
- Boulevard Consumer Square, April 2004, 708,442 sq. ft., $8.7M, $12 per square foot
- Boulevard Consumer Square, June 2009, 708,442 sq. ft., $37.8M, $53 per square foot
- Marshalls Plaza, 82,126 sq. ft., April 2004, $7.9M, $96 per square foot
- Marshalls Plaza, 82,126 sq. ft., June 2009, $4.4M, $53 per square foot
- Eastgate Plaza, 527,219 sq. ft., April 2004, $50.6M, $96 per square foot
- Eastgate Plaza, 527,219 sq. ft., June 2009, $28.1M, $53 per square foot
- Tops – South Park Plaza, 84,000 sq. ft., April
2004, $8.1M, $96 per square foot - Tops – South Park Plaza, 84,000 sq. ft., June 2009, $4.5M, $53 per square foot
- Tops Transit Commons, 112,427 sq. ft., April 2004, $10.8M, $96 per square foot
- Tops Transit Commons, 112,427 sq. ft., June 2009, $6.0M, $53 per square foot
It’s clear that Benderson Development got the best of DDR in the 2004 transaction. What’s left to be determined is whether Benderson’s decision to repurchase these 11 plazas will look as good a few years from now. With Benderson’s track record, it seems unwise to bet against them. It appears they are following Warren Buffett’s words of wisdom – be fearful when others are greedy, and be greedy when others are fearful.