Macerich is nearing completion on a refinance of its property in California’s High Desert as the mall owner works on a plan aimed at slashing $2 billion in debt.
The Santa Monica-based real estate investment trust said Wednesday it’s close to refinancing The Mall of Victor Valley’s $115 million loan, which comes due Sept. 1. The company is finalizing a 10-year, $85 million fixed-rate loan with a fixed rate expected in the mid-6 percent range, CFO Scott Kingsmore told analysts on a conference call.
The Victor Valley loan is the last of the company’s debt coming due this year on a property seen by executives as a key regional player.
Although the mall is older than some of Macerich’s other assets, it has 99 percent occupancy with Kingsmore saying it has “a lot of momentum going for it.”
“It’s an asset that we still believe is relevant,” he said in explaining why it made sense to refinance rather than give back the property. “It’s kind of the only game in town in the High Desert community of Victor Valley. It’s certainly not one of our top 10 assets, but it’s a great asset.”
Anchor tenants include a Dick’s Sporting Goods, Macy’s, JCPenney and Cinemark movie theater.
The next closest mall to Victorville is about 35 miles south in Rancho Cucamonga at Brookfield’s open-air Victoria Gardens, which negotiated its own $265 million refinance in June.
Macerich’s update on Victorville comes as it looks to improve its business under a plan it revealed in May called Path Forward. It was the first major initiative unveiled by CEO Jack Hsieh, who was tapped for the top spot in March. The strategy aims to cut about $2 billion in debt, while ensuring investment in Macerich’s top-tier and mid-range properties, or what it calls its Fortress and Steady Eddy retail centers.
Part of the debt reduction plan involves the marketing of some properties, while handing back others. This includes the short sale of Macerich’s Country Club Plaza in Kansas City and its April default on a $300 million loan for Santa Monica Place.
By the end of 2024, the company expects “to have line of sight” on $1 billion to $1.4 billion in relief from its debt load, Hsieh said during Wednesday’s call.
In the case of Santa Monica Place, Macerich said it remains “in negotiations” with its lender on the loan. Executives offered little beyond that, making it unclear if there’s a path forward for Macerich to retain the mall.
“I think I’ve said probably all we can say at this point,” Kingsmore said in response to an analyst question on whether Macerich could possibly keep the property. “The asset has its challenges, and the capital structure is upside down.”
The CFO confirmed Macerich will continue to manage the property for at least another 12 months.
Read more
Commercial
Los Angeles
Macerich surrenders Santa Monica Place to lender after $300M default
Development
Los Angeles
Simon and Macerich halt Carson mall project, slam city for “wasting” $100M
Commercial
Los Angeles
Macerich posts $127M quarterly loss, looks to sell or exit properties