Santa Monica Place Being Refinanced by Owner

Retail

As of Thursday, November 2, 2017

As the mall world continues to spin with winners and losers, The Macerich Co. reported solid financial results for the third quarter and said it is refinancing its high-end Santa Monica Place.

The Southern California real-estate investment trust said it is replacing its current $215 million loan for the Santa Monica, Calif., shopping center—whose top stores include Bloomingdale’s, Nordstrom, Barneys New York and Coach—with a new five-year floating-rate loan for $300 million, which should close some time in December.

The refinancing news was revealed during the announcement of The Macerich Co.’s third-quarter results, which showed that net income for the period ending Sept. 30, 2017, totaled $17.5 million versus $13.7 million during the same period in 2016. But profits for the nine months ending Sept. 30 dove to $113.3 million, compared to $480 million last year.

Funds from operations during the most recent third quarter totaled $145 million, down from $160.3 million during last year’s third quarter. Funds from operations for the first nine months of this year were $427.2 million, compared to $460 million for the same period in 2016.

While third-quarter profits were up, occupancy rates at Macerich’s more than 45 malls shrunk 1 percent to 94.3 percent, but lease rates rose 4.8 percent to $56.88 a square foot compared to last year’s $54.27.

Mall tenant annual sales were up to $659 per square foot this third quarter from $626 at the end of last year’s third quarter while same-center net operating income grew around 3.1 percent from the prior-year period.

“Macerich achieved solid releasing spreads and tenant sales growth. This demonstrates the health of those retailers who are evolving along with the changing shopping habits of consumers and the importance to these brands of our well-located, high-quality real estate,” said Macerich Chairman and Chief Executive Officer Arthur Coppola.

Earlier this year, The Macerich Co. sold its Northgate Mall in San Rafael, Calif., and its Cascade Mall in Burlington, Wash., to Merlone Geider Partners for $170 million. The transaction netted Macerich approximately $100 million after paying off its floating-rate note on the Northgate property.

As of Sept. 30, 2016, Cascade and Northgate generated sales per square foot of $319 and $421, respectively, and had occupancy rates of 86.5 percent and 94.9 percent. That is less than Macerich’s portfolio averages of $626 per square foot in sales and 95.3 percent occupancy during the same period.