Macerich has begun to reopen some of its malls, but only a fourth of its retail tenants are paying rent.
The real estate giant — whose portfolio spans 47 shopping centers across the United States — announced in its first-quarter conference call yesterday that it collected only 26% of its rents for the month of April.
So far in May, it has received 18% of rents and estimates that collections are “trending slightly better” than the previous month as more of its properties open back up to the public.
Thirteen of Macerich’s malls in the states of Arizona, Colorado, Indiana, Iowa, Missouri and Texas have partially reopened. The company plans to open back up “almost all” of its shopping centers by mid-June as an increasing number of states and municipalities ease coronavirus-induced restrictions on nonessential businesses.
“While many of our retailers were compelled to close during this period, the vast majority of our leases do not abate our tenants’ obligation to pay rent,” senior EVP and CFO Scott Kingsmore said in the call. “As we all continue to navigate these difficult and very unprecedented times, we understand the many challenges our tenants are facing in light of COVID-19. We will work in partnership with our tenants to collect past due rent.”
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More than 90% of Macerich’s revenues stems from leases. In the first three months of the year, it logged revenues of $226 million — $211 million of which were from lease payments — while its profits were $8.7 million.
The company has taken several steps to preserve liquidity amid the health crisis: It has drawn the bulk of the remaining capacity on its $1.5 billion revolving line of credit, as well as reduced dividends to preserve roughly $150 million of cash. (At the end of the first quarter, it had $735 million of cash on its balance sheet.)
“Will there be short-term disruption? Of course, there will be,” said senior EVP and head of leasing Douglas Healey. “But in the long run, I’m confident that the town centers we have worked so hard to develop will continue to be extremely well-positioned. Brick-and-mortar stores aren’t going away, and that’s just a fact. If nothing else, the pandemic has confirmed this.”