DDR's David Oakes

The credit crunch and crash of the CMBS market has, to put it lightly, made it more difficult to get funding for project construction. In many cases, planned developments by smaller firms just aren’t getting built, and investors are cutting their losses. But some ambitious developers are contacting their well-capitalized peers to get help with project funding. Cleveland-based Developers Diversified Realty is often on the receiving end of those requests. David Oakes, the shopping-center REIT’s chief investment officer, says that though his company has often partnered on joint ventures with smaller outfits, the number of requests he has seen for those types of developments has “increased dramatically.” Oakes recently spoke with GlobeSt.com about this aspect of the industry and the general real estate market.

GlobeSt.com: Is there a most common scenario for when a private developer approaches you?

Oakes: They all end up being pretty unique, and even the way we source them ends up being unique. In some cases it’s developers we’ve known and worked with in the past. In other cases it’s people who have contacted us knowing that we have been involved in these sorts of deals in the past. In some cases, though, it’s retailers pointing to a site where they would like to have a store open, but they know the developer they started working with had tied up the land but doesn’t necessarily have the financing in place to be able to move forward with the project. For the right site, the tenant is very concerned about being able to open on the schedule on which they originally budgeted. In some cases we’re seeing banks come to us where they’ve made a land loan and now the local developer isn’t able to put together the same sort of construction financing that they were planning to take out that land loan.