Finance REITs
July 15, 2008
By: Barbra Murray, Contributing Editor
The unfavorable lending market is not holding everyone back. The Macerich Co. recently closed $895 million in financing on five retail properties and secured a commitment for a $150 million loan on a sixth asset.
The properties, save for one, are all located in California.
Santa Monica, Calif.-based Macerich has been hard at work over the last couple of months. Just last week, the REIT closed a $170 million loan on Fresno Fair, a super regional mall in Fresno, Calif.; completed a $300 million construction/permanent loan on super regional mall The Oaks in Thousand Oaks, Calif.; and entered into an agreement for $150 million in financing for Broadway Plaza in Walnut Creek, Calif. The months of May and June were no less busy. Macerich wrapped up a $100 million loan on Victorville, Calif.-based regional mall The Mall of Victor Valley in May. And last month, the company closed on a $150 million loan on the newly completed SanTan Village regional shopping center in the Phoenix suburb of Gilbert, Ariz., and concluded a $175 million refinancing deal for the prestigious Westside Pavilion regional mall in West Los Angeles.
"Many of Macerich's malls have been around for years, and the company has several trophy properties with highly successful anchors that are performing above average," James Bieri, president & CEO of retail real estate consulting firm GVA Bieri, told CPN today. "In general, they have great shopping centers and as long as tenant sales continue to increase, the properties will increase in value."
These days, lenders are hardly jumping at the opportunity to provide financing to commercial real estate investors. The glory days when banks made mega-loans available to borrowers without much ado have disappeared for the time being. It seems no real estate sector is immune to the change in climate, particularly not the retail market where, as is reiterated in a mid-year report by real estate investment services firm Marcus & Millichap, fundamentals have softened as a result of the economy's decline and the severe downturn in the housing market. However, some retail property types are still faring relatively well. "The concept of a fortress mall, or a trophy mall, is the closest thing to a bond in real estate; they're not building them anymore," Bieri said. "In many areas, it's difficult to find the land for super regional malls in close proximity to the population. And the cornerstone is the anchor; properties may have Sears, but that is not a fashion destination like Nordstrom, Neiman Marcus or Saks Fifth Avenue. Trying to put together this kind of facility is very difficult." Moreover, he added, there is reduced risk on such properties because of barriers to entry, which makes it challenging to replace this type of investment.
Macerich is a fully integrated self-managed REIT that engages in the acquisition, development, leasing and management of regional malls across the United States. The company's portfolio encompasses 72 properties totaling 77 million square feet of gross leasable space. Macerich stock opened today at $53.64.
By: Barbra Murray, Contributing Editor
The unfavorable lending market is not holding everyone back. The Macerich Co. recently closed $895 million in financing on five retail properties and secured a commitment for a $150 million loan on a sixth asset.
The properties, save for one, are all located in California.
Santa Monica, Calif.-based Macerich has been hard at work over the last couple of months. Just last week, the REIT closed a $170 million loan on Fresno Fair, a super regional mall in Fresno, Calif.; completed a $300 million construction/permanent loan on super regional mall The Oaks in Thousand Oaks, Calif.; and entered into an agreement for $150 million in financing for Broadway Plaza in Walnut Creek, Calif. The months of May and June were no less busy. Macerich wrapped up a $100 million loan on Victorville, Calif.-based regional mall The Mall of Victor Valley in May. And last month, the company closed on a $150 million loan on the newly completed SanTan Village regional shopping center in the Phoenix suburb of Gilbert, Ariz., and concluded a $175 million refinancing deal for the prestigious Westside Pavilion regional mall in West Los Angeles.
"Many of Macerich's malls have been around for years, and the company has several trophy properties with highly successful anchors that are performing above average," James Bieri, president & CEO of retail real estate consulting firm GVA Bieri, told CPN today. "In general, they have great shopping centers and as long as tenant sales continue to increase, the properties will increase in value."
These days, lenders are hardly jumping at the opportunity to provide financing to commercial real estate investors. The glory days when banks made mega-loans available to borrowers without much ado have disappeared for the time being. It seems no real estate sector is immune to the change in climate, particularly not the retail market where, as is reiterated in a mid-year report by real estate investment services firm Marcus & Millichap, fundamentals have softened as a result of the economy's decline and the severe downturn in the housing market. However, some retail property types are still faring relatively well. "The concept of a fortress mall, or a trophy mall, is the closest thing to a bond in real estate; they're not building them anymore," Bieri said. "In many areas, it's difficult to find the land for super regional malls in close proximity to the population. And the cornerstone is the anchor; properties may have Sears, but that is not a fashion destination like Nordstrom, Neiman Marcus or Saks Fifth Avenue. Trying to put together this kind of facility is very difficult." Moreover, he added, there is reduced risk on such properties because of barriers to entry, which makes it challenging to replace this type of investment.
Macerich is a fully integrated self-managed REIT that engages in the acquisition, development, leasing and management of regional malls across the United States. The company's portfolio encompasses 72 properties totaling 77 million square feet of gross leasable space. Macerich stock opened today at $53.64.
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