Author Topic: MAC - Macerich Corporation  (Read 4462 times)

BG2008

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Re: MAC - Macerich Corporation
« Reply #10 on: October 17, 2019, 03:51:09 PM »
Anyone nibbling here, at $27.44 and ~11% yield? 

In September, they started the phased opening of the Fashion District in Philly, which should be positive contribution to their cash flow.  And for all of the doom and gloom I hear about the mall business, I don't see the doom and gloom at the Macerich locations I've visited.  Lots of foot traffic, people seem to be spending money.  I certainly can't claim to have visited every location, but I have seen multiple locations while traveling for work, and the 11% yield seems overdone given the foot traffic and physical ground location of their properties.   

The future of malls seems to be a mix of retail, lifestyle, and apartments/condos.  Given the physical locations owned by Macerich, seems like they are well-positioned to navigate this transition.

Can you list the locations that you have visited?  Let's try to crowd source the malls on CoBF!!


Spekulatius

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Re: MAC - Macerich Corporation
« Reply #11 on: October 17, 2019, 05:45:29 PM »
Quote
The smart people that I see in the space are creating holistic places that is future proof with mixed use developments that offers live, work, play dynamics that includes office, multi-family, and retail.  I think these development are future proof for at least another 20 years which give me more comfort.  The traditional malls are on a collision course with the trend.  I would bet that Amazon and packages continue to eat away at the Malls.  I think the 3.5% unemployment is giving the malls breathing room.  If we ever hit 6-7% unemployment, things can get dicey really quickly.

As BG2008 noted, many malls better located malls can probably survive which a lot of square footage being repurposed for different uses, like mixed living, offices, restaurant, community centers. The problem that I see with this is that itís not clear to me that the rents the owner is getting after that conversion is higher than what the malls are getting right now. It may still make sense to do the conversion, when the owner can convert a 8-9% cap rate asset with a murky future into a 5-7% cap rate asset with a supposedly safe future, if you look at NAV and even including the cost of conversion. However, the owner will not see an increase in FFO from this, despite investing more  Capital (or increasing the debt load) although NAV May increase. This is a bit what we are see8ng with all these REITs, their FFO is decreasing, their debt is often flat or increasing too, while they are shedding assets and their NAV supposedly increases. In most cases, Mr Market isnít given any credit for this, right or wrong. Essentially, these Retail REITs have to paddle hard just to stay put. Sooner or later, the dividends will need to be cut to account for  the higher capital needs and lower cap rates.
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