Macerich Announces Initial Progress in its Path Forward Strategic Plan

Rhea-AI Summary

Macerich (NYSE: MAC) has announced the acquisition of the remaining 40% share of Arrowhead Towne Center and South Plains Mall from their joint venture partner for $36.5 million plus debt. This transaction, completed on May 14, grants Macerich full ownership of these high-performing assets.

The company also plans to sell a non-mall asset expected to generate $110 million in net proceeds, set to close this summer. Arrowhead Towne Center, a top 10 NOI center and sales PSF leader, is located in a high-growth Phoenix area, benefitting from a significant microchip investment by Taiwan Semiconductor Manufacturing Company.

South Plains Mall in Lubbock, Texas, is also a prominent asset with a large trade area and ongoing investments by anchor tenant Dillard's. Upcoming investor outreach includes participation in ICSC Las Vegas and Nareit's REITweek 2024 Investor Conference in June.

Positive

• Acquisition of full ownership of Arrowhead Towne Center and South Plains Mall.
• Arrowhead Towne Center is a top 10 NOI and sales PSF center with high occupancy.
• Significant microchip investment in Arrowhead's trade area expected to boost local economy.
• South Plains Mall benefits from a growing population and major investments from Dillard's.
• Sale of a non-mall asset expected to generate $110 million in net proceeds.
• Investor outreach includes participation in major industry events.

Negative

• Acquisition cost includes a 7.2% cap rate debt for Arrowhead Towne Center.
• Financial impact of the acquisition and sale transactions on overall leverage not detailed.
• Potential risks associated with the reliance on ongoing regional economic growth.

Insights

Financial Analyst

Macerich's acquisition of the remaining 40% shares of Arrowhead Towne Center and South Plains Mall for $36.5 million plus debt is a pivotal move. This consolidation increases Macerich's control over high-performing assets, potentially enhancing its revenue streams. Both centers are dominant in their markets, with Arrowhead being a top 10 NOI center for Macerich. The sale of a non-mall asset, expected to generate $110 million in net proceeds, reinforces the company's strategy to reduce leverage and streamline its portfolio. For retail investors, this move signifies a commitment to financial stability and strategic asset management. However, the high cap rates and the accompanying debt could introduce short-term financial strain, though the long-term benefits of full ownership and simplified business structure may outweigh these concerns.

Market Research Analyst

The acquisition of Arrowhead Towne Center and South Plains Mall must be evaluated in the context of their respective markets. Arrowhead Towne Center is strategically located in a high-growth area of Metro Phoenix, benefiting from the massive investment by Taiwan Semiconductor Manufacturing Company, which will drive local economic growth and, consequently, consumer spending. The South Plains Mall, with its strong ties to Texas Tech University and a significantly expanding population, similarly promises a stable and growing customer base. These factors can lead to an increase in foot traffic and sales, enhancing Macerich's profitability. Nonetheless, the market dynamics such as competition from online retail and local economic fluctuations should be monitored closely.

Real Estate Specialist

From a real estate perspective, acquiring full ownership of Arrowhead Towne Center and South Plains Mall consolidates Macerich's footprint in high-potential regions. Arrowhead’s location in a high-growth area with substantial future investment by TSMC and South Plains Mall’s proximity to Texas Tech University, are advantageous. The future sale of a non-mall asset aligns with industry trends where companies diversify or consolidate to enhance their portfolio's profitability. However, the debt associated with these acquisitions, while manageable, could pose risks if market conditions deteriorate or if projected economic benefits do not materialize as expected.

Macerich Purchases Remaining 40% Share of Arrowhead Towne Center (a Top 10 NOI Center for Macerich) and South Plains Mall from JV Partner, and Commits to the Sale of a Prominent Non-Mall Asset

SANTA MONICA, Calif., May 16, 2024 (GLOBE NEWSWIRE) -- Macerich (NYSE: MAC), one of the nation’s leading owners, operators and developers of major retail properties in top markets, today announced its purchase of the remaining 40% share of both Arrowhead Towne Center (Metro Phoenix) and South Plains Mall (Lubbock, Texas) for $36.5 million plus the debt, which for Arrowhead is a 7.2% cap rate, from its joint venture partner, a global institutional investor.

This transaction, which closed on May 14, gives Macerich full ownership of both properties.

Additionally, Macerich has executed a contract for the sale of an open-air asset in a major market. The transaction is expected to generate approximately $110,000 million of net proceeds based on an expected cap rate of 6.5% and is anticipated to close this summer.

“We are pleased to achieve full ownership of these highly attractive retail assets via the purchase of the remaining 40% share from our JV partner,” said Jack Hsieh, President and Chief Executive Officer, Macerich. “Given the pending, massive microchip investment within the Arrowhead Towne Center market, we believe there are significant positive impacts to our trade area that we will soon be able to capitalize upon. With these transactions, Macerich is acting on its strategic plan that includes disposing of certain assets to reduce our leverage and simplifying our business through selectively consolidating certain JV interests over time.”

Located in a high-growth area of Metro Phoenix, the 1.1 million-square-foot, super-regional Arrowhead Towne Center is a market-dominant, top 10 NOI center for MAC and a top 10 sales PSF center at well over $1,100 PSF – second only to Scottsdale Fashion Square among Macerich’s Phoenix market assets. Currently 100% leased, Arrowhead Towne Center is anchored by Dillard’s, Macy’s, JCPenney, DICK’s Sporting Goods, AMC Theatres and a brand-new Round1 Spo-Cha.

The buoyant trade area consists of 1.6 million people and is home to the new Taiwan Semiconductor Manufacturing Company site consisting of three fabs, opening in phases beginning in 2025 and bringing TSMC’s total investment in Arizona to more than $65 billion. The three fabs are expected to create 6,000 direct high-tech, high-wage jobs, more than 20,000 accumulated unique construction jobs, and tens of thousands of indirect supplier and consumer jobs.

Arrowhead Towne Center’s trade area also boasts three top-ranked universities and 13,000 K-12 students. More than one-third of Phoenix Metro residents live in this area, and over 43% of the county's growth over the next 25 years will take place here.

South Plains Mall is a 1.1 million square foot super-regional shopping center in Lubbock, Texas, home to Texas Tech University and its $4.3 billion annual economic impact. The vast trade area covers more than 40,000 square miles and 35 counties. Lubbock’s population is growing at 6% annually, double the national average. Longtime anchor Dillard’s is currently investing more than $40 million in a new flagship store set to open in Q4 2024 on the site of the former Sears parcel to consolidate its two existing locations.

Upcoming Investor Outreach

Macerich is scheduled to participate in the following events:

• ICSC Las Vegas in Las Vegas, Nevada, May 19-20, 2024
• Nareit’s REITweek: 2024 Investor Conference will be held at the New York Hilton Midtown in New York City from June 4 to 5, 2024. The conference will include a company presentation on June 4, 2024, at 11:45 a.m. Eastern Time. Additional details about the presentation, including a live audio webcast, will be available to the public on the Investor Relations website, investing.macerich.com.

About Macerich

Macerich is a fully integrated, self-managed and self-administered real estate investment trust (REIT). As a leading owner, operator and developer of high-quality retail real estate in densely populated and attractive U.S. markets, Macerich’s portfolio is concentrated in California, the Pacific Northwest, Phoenix/Scottsdale, and the Metro New York to Washington, D.C. corridor. Developing and managing properties that serve as community cornerstones, Macerich currently owns 47 million square feet of real estate consisting primarily of interests in 43 retail centers. Macerich is firmly dedicated to advancing environmental goals, social good and sound corporate governance. A recognized leader in sustainability, Macerich has achieved a #1 Global Real Estate Sustainability Benchmark (GRESB) ranking for the North American retail sector for nine consecutive years (2015-2023). For more information, please visit www.Macerich.com.

Macerich uses, and intends to continue to use, its Investor Relations website, which can be found at investing.macerich.com, as a means of disclosing material nonpublic information and for complying with its disclosure obligations under Regulation FD. Additional information about Macerich can be found through social media platforms such as LinkedIn. Reconciliations of non-GAAP financial measures, including NOI and FFO, to the most directly comparable GAAP measures are included in the earnings release and supplemental filed on Form 8-K with the SEC, which are posted on the Investor Relations website at investing.macerich.com.

MAC-I
SOURCE: Macerich
MEDIA CONTACT:
Karen Maurer, Macerich, 602-708-6311, Website: https://www.macerich.com/

FAQ

What recent acquisitions has Macerich (MAC) made?

Macerich acquired the remaining 40% share of Arrowhead Towne Center and South Plains Mall for $36.5 million plus debt.

What is the significance of Arrowhead Towne Center for Macerich (MAC)?

Arrowhead Towne Center is a top 10 NOI center and a leader in sales PSF, located in a high-growth area of Phoenix.

What are the expected financial outcomes from Macerich's (MAC) recent asset sale?

The sale of a non-mall asset is expected to generate approximately $110 million in net proceeds.

What upcoming events will Macerich (MAC) participate in?

Macerich will participate in the ICSC Las Vegas event and Nareit's REITweek 2024 Investor Conference in June.

How does the microchip investment impact Macerich's (MAC) Arrowhead Towne Center?

The microchip investment by Taiwan Semiconductor Manufacturing Company is expected to bring significant economic benefits to the area.