Retail real estate investment trust (REIT) – The Macerich Company (MAC) – has gained full ownership in five super regional malls by acquiring 49% stake of its joint venture (JV) partner for $1.89 billion, including debt assumption. The move would help the company leverage these high productivity malls, including Queens Center and Washington Square.
Specifically, this acquisition, made from a wholly owned subsidiary of the Ontario Teachers' Pension Plan Board, involved $673 million of property-level debt. The rest of the amount involved issuance of $1.22 billion of Macerich common stock at a fixed price of $71 per share, representing 10.9% of its common stock to the Ontario Teachers' Pension Plan’s subsidiary.
Gaining full ownership in high productive super regional malls is a strategic fit for Macerich. We believe that addition of assets like Queens Center and Washington Square, which generate sales per square foot of $1,089 and $1,044, respectively, broadens the company’s scope to enhance its top line.
Other properties like Los Cerritos Center that is going through an expansion, Stonewood Center and Lakewood Center are also expected to help the company raise its cash flow.
In a separate announcement, Macerich disclosed a JV partnership with Lennar Corp. (LEN) for developing a 500,000 square-foot urban outlet project at Candlestick Point in San Francisco.
Going forward, we believe that Macerich’s premium operating portfolio promises better growth prospects. Increasing mall tenant annual sales per square foot and re-leasing spreads would pave the way for a robust top line. Further, the company’s portfolio-repositioning activity bodes well for the long term.
Macerich currently carries a Zacks Rank #2 (Buy). Investors interested in retail REITs may consider stocks like DDR Corp. (DDR) and General Growth Properties, Inc. (GGP). Both stocks carry the same rank as Macerich.
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