Shopping center

Macerich (MAC) unveils reinvestment plans for a shopping center

The Macerich Company MAC recently announced plans for the next phase of the company’s ongoing reinvestment in the company’s iconic Scottsdale Fashion Square, which covers 1.9 million square feet.

One of the nation’s top shopping destinations – Scottsdale Fashion Square – is located in the heart of upscale Scottsdale, Arizona, and features more than 240 shops and restaurants.

In November 2018, Macerich launched the first phase of the property’s spectacular luxury wing, which was a huge success. It has attracted an enviable collection of new pure luxury retailers and restaurants to the market, while the property’s existing major luxury brands have re-engaged, expanded and renovated their stores.

As part of the next phase of ongoing reinvestment at Scottsdale Fashion Square, Macerich plans to extensively renovate the interior and exterior of the South Wing. In particular, the south wing anchored by Nordstrom will be redefined. The property will offer a striking arrival point, with luxury valet parking, at its busiest entrance.

Additionally, two-story storefronts and exterior-facing retail buildings at the south entrance and porte-cochere, accommodating up to five destination restaurants, were planned in this phase.

Scottsdale Fashion Square will serve new complementary uses that will include the upscale fitness and wellness destination Life Time Scottsdale and the boutique hotel Caesars Republic Scottsdale, both currently under construction.

Additionally, based on its past experience in enriching the property’s customer base and retailer sales potential, Macerich plans to add more mixed-use elements to Scottsdale Fashion Square. This will be executed on a seven-acre parcel located immediately north of the mall that reaches Goldwater Boulevard to Scottsdale Road. It will include high-end residential units, Class A office space and hotel uses.

Macerich has a high concentration of high-end shopping centers in dynamic US markets, primarily concentrated in California, the Pacific Northwest, Phoenix/Scottsdale and the Metro New York-Washington, DC corridor. It owns nine regional shopping centers in the Phoenix metro area and its Arizona portfolio covers more than 9 million square feet.

These properties are located in densely populated areas, where affluent consumers with significant disposable incomes live and play. The recent decision to reinvest in Scottsdale Fashion Square will provide the company with an opportunity to capitalize on the affluent customer spending trend and generate decent cash flow.

Shares of this company Zacks Rank No. 3 (Hold) have lost 5.3% in the past three months, against a decline of 9.7% in the sector.

Image source: Zacks Investment Research

Actions to Consider

Some higher ranked stocks in the retail REIT sector are Kimco Real Estate Kim, Regency centers REG and SITE Centers Corp. SITC, each wearing a Zacks No. 2 (buy) rank. You can see the full list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Zacks consensus estimate for Kimco Realty’s FFO per share for the year has moved 1.3% north in the past two months to $1.56.

The Zacks consensus estimate for Regency Centers’ FFO per share for the current year has risen 1.8% over the past two months to $3.96.

The Zacks consensus estimate for 2022 FFO per SITE Centers share has risen nearly 1% over the past two months to $1.16.

Note: Everything related to earnings presented in this description represents funds from operations (FFO) – a metric widely used to assess the performance of REITs.

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