By Brandon Brown | Phoenix Business Journal
While brick-and-mortar retail was one of the industries hit the hardest during the COVID-19 pandemic, the owner of several shopping malls in the Phoenix area expressed optimism when looking ahead to the holiday shopping season and next year due to pent-up customer demand.
Macerich Co., which owns such malls as Scottsdale Fashion Square, Kierland Commons, Biltmore Fashion Park, Arrowhead Towne Center and Chandler Fashion Center, said it has started to see improvements in signing new tenants and has set high expectations for the holiday shopping season.
During a call with investors and stock analysts Thursday, Macerich CEO Tom O’Hern, said the company is past making the initial changes COVID required and now is looking at trying to get things back to normal.
“Our second quarter was more about getting centers opened and getting our tenants open safely and less about leasing,” O’Hern said. “The focus in the third quarter was collecting past due rents and started to shift back to leasing.”
Across its entire portfolio Macerich signed 120 leases for 342,000 square feet during the third quarter. Doug Healey, the senior executive vice president of leasing, said among those new leases include Lucid Motors and Ducati Paris at Scottsdale Fashion Square, and Kids Empire and State 48 Brewery at SanTan Village in Gilbert.
Rough quarter, but improving
Macerich was able to open a number of new tenants at Scottsdale Fashion Square during the third quarter, including an Amazon 4-star store, the Capital One Café, and digitally native retailers Indochino and Warby Parker.
On the rent side, O’Hern said it collected about 80% of its rents during the third quarter. He said for the most part, the tenants that aren’t making rent, have come to terms with them. Those terms usually come in the form of deferred rent with repayment in 2021 and in most cases amendments to the lease that are more favorable to the landlord.
Macerich released its Q3 earnings on Thursday, reporting a quarterly loss of $22.2 million. In the same quarter a year ago, the company posted an earnings of $46.4 million.
The Santa Monica-based real estate investment trust said it had funds from operations of $83.4 million during the third quarter. That is down 37% from where FFO was at in Q3 2019. Funds from operations is a closely watched measure in the REIT industry. It takes net income or loss and adds back items such as depreciation and amortization.
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