Shopping Center Owner Macerich Shows Net Loss for the Quarter
Macerich Company, the owner of retail centers Santa Monica Place in Santa Monica, Calif., and the Westside Pavilion in Los Angeles as well as other properties, had a $33.6 million net loss for the first quarter ended March 31, 2018, compared with a profit of $69.2 million for the same period last year.
Revenues were also down from a year ago. For the first quarter of this year, revenues declined to $236.7 million compared with $247 million last year.
Despite these lackluster financial results, the company, based in Santa Monica, said its mall tenants saw their annual sales increase by 7.4 percent to $686 a square foot compared to $639 for the year ended March 31, 2017. Mall occupancy rates declined slightly this year to 94 percent compared with 94.3 percent last year while average rent per square foot went up 3.8 percent to $58.44 during the first quarter of this year compared with $56.31 last year.
Arthur Coppola, chairman and chief executive of the company, said he is excited about the re-leasing spreads, which were up 14.7 percent for the year ended March 31.
Recently, Macerich formed a joint venture with Hudson Pacific Properties to transform the Westside Pavilion shopping center to creative office space. The mall, built in 1985, had difficult parking and was facing increased competition from the nearby revamped Westfield Century City shopping center, which snapped up the Nordstrom store that used to be located at Westside Pavilion. Also, Macy’s closed its department store at Westside Pavilion and beefed up its store at Westfield Century City.
In its quarterly earnings, Macerich said that the total cost of reconfiguring Westside Pavilion would be between $425 million to $475 million, with the project to be finished some time in 2021. Macerich will own 25 percent of the project and Hudson will own the rest.
Macerich continues to sell its non-core assets and recycle the capital into higher-quality assets. During the quarter, Macerich and a joint venture partner sold a portion of an office building next to Fashion District of Philadelphia for $42 million. Since 2013, the company has sold 21 non-core retail centers for $1.8 billion.