The answer to how Macerich’s California properties are doing is nuanced. In a nutshell, it depends on what mall and where.
As the Santa Monica-based mall real estate investment trust looks to pull a turnaround of its business, California remains a mixed bag.
The company’s been selling off underperformers, which it refers to as Eddies. Meanwhile, it’s boosting investment in those that will bring it the greatest returns long term. Those it refers to as its Fortress properties. Internally, Macerich categorizes its malls as Fortress, Steady Eddies and Eddies, with the latter holding the greatest potential for sell off.
In Northern California, Macerich owns the Village at Corte Madera and Broadway Plaza in Walnut Creek.
“Those are doing quite well given some of the, I call it, more headline news in downtown San Francisco,” CEO Jack Hsieh told analysts on Monday during the company’s quarterly update. “Although, I believe the mayor is doing an excellent job up there in terms of trying to address some of the perception issues in that city.”
San Francisco Mayor Daniel Lurie won the mayoral election in November and campaigned on the idea of reviving the city by addressing homelessness and revitalizing downtown.
Moving to the central part of the state, Macerich’s Vintage Faire Mall in Modesto and Fashion Fair in Fresno are also “doing well,” Hsieh said. The CEO attributed that to the centers being in “defined trade areas.”
Macerich Retools SoCal Mall Portfolio
The much larger Southern California mall portfolio is in what Hsieh called a “reshape.”
That kicked off last year with property sales.
The Oaks in Thousand Oaks sold in December for $157 million to Stockdale Capital Partners. Macerich sent Santa Monica Place into receivership after it defaulted on its $300 million loan tied to the property last April. Macerich is also in contract to sell the Lakewood Center.
Across all of its U.S. properties, Macerich has sold over $800 million in malls. That total includes Santa Monica Place and Lakewood Center.
Meanwhile, it’s a tale of two malls in the High Desert, where Macerich owns the Mall of Victor Valley Mall in Victorville and Inland Center in San Bernardino.
The Victorville property is “very solid,” Hsieh said.
“It’s in a very captive trade area,” he said of Victor Valley. “I wouldn’t call it L.A. It’s in that Southern California Beltway. It’s the only mall in town up in Victor Valley.”
In contrast, Inland Center faces more competition from nearby malls such as Victoria Gardens and Ontario Mills, along with power centers.
Los Cerritos Center a Crown Jewel
If Macerich had a type it would be a mall in a trade area with little competition and a big footprint.
In California, Los Cerritos Center – one of the company’s Fortress properties – exemplifies that type and holds the most potential for Macerich in the future.
“So, if you look at what we have left in the go forward, Los Cerritos [Center],” Hsieh said, “that mall is doing gangbusters right now. Lots of traffic, lots of sales, lots of tenant demand.”
The company is looking at how to fill the former Sears location at the Cerritos center. It is also in talks with an undisclosed company to fill the old Forever 21 store.
“In terms of our LA exposure, I would say Southern California we feel really good about Los Cerritos, which is our most important asset down there at this point and Victor Valley,” Hsieh said.
Macerich Financials
The CEO stepped into the top spot at Macerich last March to right the business.
The past quarter saw the company swing to a net loss of $41.5 million in the quarter ended June 30, compared to net income of $265.5 million. Macerich sold the Chandler Fashion Center in Arizona in the year-ago quarter for $334.3 million, boosting its net income at that time.
Total revenue for the company was $249.8 million, which was up about 16 percent.
The more specific dive into the company’s leasing numbers offered a better picture around the business direction.
Macerich management set a goal for the company to average 4 million square feet in lease deals this year and in 2026. So far this year, it’s inked 4.3 million square feet.
Traffic across its malls rose 1.6 percent in the recently ended quarter compared to a year ago.
Occupancy sat at 92 percent, which was down on account of Forever 21’s store closures. About half of the fast-fashion retailer’s former Macerich spaces have been leased and another 30 percent have letters of intent.
Macerich shares closed up nearly 5 percent to $17.43, a day after the company’s quarterly update. The company had a recent market cap of $4.6 billion.
Be First to Comment