Malls Represent Great Value, Huge Potential To Major Real Estate Players
February 28th, 2011
One after another, the major players in real estate are moving to add mall properties to their portfolios in addition to the mad dash for multifamily housing[1]. According to Bloomberg news, Blackstone Group, L.P., agreed to buy one of the biggest U.S. shopping centers, Centro Properties Group, for $9.4 billion over the past weekend[2]. And this is not just one mall; it’s 588 of them, making this deal Blackstone’s biggest deal since 2007. Experts hope that the firm is right on the money, literally, and betting on a major U.S. commercial recovery in the coming months.
Centro Properties Group is an Australian company that has suffered both in the U.S. and at home as both countries’ real estate markets struggled. This acquisition will likely enable “Centro’s Australian operations to continue as an independent company,” said an unnamed source familiar with the deal. Michael Wood, a Sydney-based real estate advisor, believes that this purchase price is a good sign because the price that Centro is getting is close to net tangible assets, or the total assets of the company. This could indicate that the commercial real estate world is, at least in some cases, returning to “normal” as companies buy and sell for near-worth rather than focusing exclusively on bargain basement prices and desperately made deals.
Recently, Forrester Research released a study in which its vice president and research director announced that “consumer purchasing behavior [is] returning to normal,”[3] albeit much of this buying is now taking place online, which does not necessarily help the physical retail real estate industry. Do you think that the retail real estate sector will ever fully recover from the past few years, or have consumer buying habits changed in such a way that some of the damage will be permanent?
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[1] http://www.theglobeandmail.com/globe-investor/investment-ideas/streetwise/morning-meeting-blackstone-joins-mall-spree/article1923183/
[2] http://www.bloomberg.com/news/2011-02-28/blackstone-to-buy-centro-s-u-s-assets-for-9-4-bln-wsj-says.html
[3] http://www.businesswire.com/news/home/20110228005297/en/Double-Digit-Growth-Online-Retail-Western-Europe
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