Macerich’s Santa Monica Place shopping center, one block east of Santa Monica Pier, sits in the middle of a prime retail corridor that would welcome more than 8 million visitors in a typical, non-pandemic year. But like most malls during Covid-19, the 523,000-square-foot Santa Monica Place has been hit.
Macerich has also seen its finances suffer, although recent months have shown some signs of improvement. Overall rent collections had risen to 81 percent by the end of October, compared to 60 percent at the end of the second quarter.
A decade ago, Macerich wrapped up a $285 million makeover on the property, converting it from an enclosed center to an open-air mall by removing the roof and gutting the interior. The extension of the Metro Expo Line to Downtown Santa Monica in 2016 provided another boost to traffic in the area.
In 2017, the mall REIT refinanced the three-story complex with a $300 million loan from Wells Fargo, which was securitized into a single-asset CMBS deal known as WFCM 2017-SMP. Documents associated with that deal provide an inside look at the property’s finances.
As of late 2017, the mall was 89 percent leased to “a mix of traditional and non-traditional retail, as well as dining and entertainment options,” according to the loan prospectus. Data from Trepp shows that occupancy has since risen to 94 percent as of mid-2020, helped by two big leases signed after the refinancing, both of which are now among the mall’s top five tenants.
Cayton Children’s Museum signed a lease for 21,000 square feet at the mall in late 2018, relocated from its 14,000-square-foot space at the Jewish Federation Goldsmith Center. A few months later, supermodel Tyra Banks signed a lease for ModelLand, a 21,000-square-foot interactive amusement park.
The current anchor tenants at Santa Monica Place were all brought in following the 2010 renovation. Nordstrom replaced a Robinson’s-May at the complex, while Bloomingdale’s took up two floors at what used to be a three-floor Macy’s. ArcLight Cinemas moved into the third floor of the former Macy’s in 2015.
Excluding the two anchor retailers, whose annual base rent per square foot is in the single digits, the overall average base rent at the shopping center was $71 a foot in 2017.
The CMBS loan on the shopping center has remained current throughout the pandemic, with a solid debt service coverage ratio of 2.71. The loan is currently set to mature next month, although it has two one-year extension options remaining.
Macerich’s corporate headquarters, also located in Santa Monica, are just a 10-minute walk from Santa Monica Place.