Macerich lines up its next mall as two more property loans default
Occupancy is improving and a new credit line is in place. The mortgage problems show how uneven the mall owner's turnaround remains.
Macerich is preparing another mall acquisition while negotiating with lenders over nearly $400 million of property loans that fell into default after September. The shopping-center owner's latest results show stronger leasing, but also more unfinished work on its balance sheet.
The company said it is under contract to buy an unnamed mall and expects to close by year-end. On November 3, it opened a new acquisition credit line with a $550 million commitment. About $260 million was available to borrow against the properties initially pledged as collateral; nothing had been drawn.
That fresh borrowing capacity arrives as a $74.4 million loan at Fashion Outlets of Niagara Falls went into default on October 6, followed by a $325 million loan at Fresno Fashion Fair on November 2.
Two more loans to resolve
These mortgages are secured by the individual malls and are non-recourse to Macerich, meaning the lenders' repayment claims are against the properties rather than the parent company. Macerich is negotiating the terms of both loans. Neither property has been reported as sold or handed back to its lender.
The latest defaults add to older problems at Santa Monica Place and Twenty Ninth Street. Santa Monica Place is already controlled by a court-appointed receiver, although Macerich still holds title. The joint venture that owns Twenty Ninth Street has been negotiating with its lender since that loan went into default in February.
Fresno is particularly worth watching: Macerich still includes it in the group of properties it calls its Go-Forward portfolio. Its financing problem therefore sits inside the portfolio intended to drive the recovery.
The operating recovery is real, but the earnings lift needs unpacking
Net operating income, essentially property revenue after property operating costs, rose 4.7% at the Go-Forward centers in the third quarter, excluding lease termination payments. That comparison excludes the recently acquired Annapolis Mall and includes Crabtree Mall in both periods. Overall leased occupancy reached 94.9%, up from 93.4% a year earlier.
The picture looks different across Macerich's two versions of funds from operations, or FFO. This property-company earnings measure adds back real estate depreciation and removes specified property-sale effects. Macerich's adjusted version then excludes additional items, including default interest and the impact of the property in receivership.
| Measure | 2026 | 2025 |
|---|---|---|
| FFO | $87.0 | $88.6 |
| Adjusted FFO | $109.1 | $96.2 |
| FFO per diluted share | $0.29 | $0.33 |
| Adjusted FFO per diluted share | $0.37 | $0.36 |
Research by Ticker Byline shows that the increase in items excluded from adjusted FFO was larger than the increase in adjusted FFO itself. Those exclusions rose by $14.5 million, while adjusted FFO increased by $12.9 million. FFO before those additional exclusions fell by $1.6 million.
The biggest new exclusion was a $10.4 million charge for paying off the Green Acres Mall mortgage early. Macerich also excluded $7.1 million related to Santa Monica Place and $3.8 million of default interest. Those third-quarter figures precede the new Niagara Falls and Fresno defaults.
A larger share base also absorbed much of the adjusted FFO growth: diluted shares and units used in the calculation rose nearly 12%, leaving the per-share figure up just a penny.
Buying room, with cash still needed for the turnaround
Macerich has already completed one mall purchase this year: Annapolis Mall and an adjacent vacant Sears parcel cost $272 million before closing adjustments. In September, it sold Pacific View for $69.7 million through the buyer's assumption of the property's loan.
The company reported about $2.2 billion of liquidity, a mix that includes credit lines and $372 million of forward share-sale proceeds not yet received. Consolidated cash was $560.8 million at September 30. Cash generated by operations over the first nine months slipped to $253.7 million from $271.4 million a year earlier.
See Macerich's company profile for the operating history, financing changes and completed acquisitions.