As the retail REIT sector continues to take a beating amid a combination of falling consumer demand and frozen credit markets, analysts are zeroing in on shopping center owner Developers Diversified Realty. On March 6, credit rating agency Standard & Poor's placed the Beachwood, Ohio-based REIT's BBB- corporate credit rating on a negative watch list, citing “concern that continued retail tenant stress and less receptive capital markets will hinder DDR's efforts to improve its currently limited liquidity position.” On March 11, Moody's Investor Service downgraded its senior unsecured debt rating to junk status.

Developers Diversified's troubles are by no means insurmountable, says Michael Magerman, senior vice president for the REIT sector with Realpoint LLC, a Horsham, Pa.-based credit rating agency. But the company has $372.8 million in debt maturing this year and $4.4 billion in debt maturing from 2010 through 2012 and as of December 2008, it had just $283 million available on its $1.3 billion revolving credit facility.

In a bid to raise liquidity, the REIT entered an agreement with German investor Alexander Otto for the sale of 30 million of its common shares for approximately $112.5 million, plus a $60 million, five-year, fixed-rate mortgage loan.