The Macerich Co. had $11.7 million in net income in the fourth quarter of 2018, according to an earnings report released Feb. 7. The number is far below the $32.8 million in net income reported for the fourth quarter of 2017.
The company reported funds from operations of $165.7 million. It reported $155.6 million the year prior.
The Santa Monica-based company reported that mall tenant sales per square foot in 2018 were $726, up 10 percent year-over-year. Macerich’s mall portfolio was 95.4 percent occupied at the end of 2018, a slight uptick from the 95 percent occupancy rates seen at the end of 2017. Average rent per square foot increased 3.7 percent to $59.09.
Macerich owns 51 million square feet of real estate, mainly across 47 shopping centers.
The Macerich Co. is in the midst of a handful of large-scale redevelopment projects.
Locally, the company is working with Hudson Pacific Properties on One Westside, the redevelopment of the Westside Pavilion into creative office space. Google has signed a roughly 14-year lease for the 584,000-square-foot project. The renovation of the center is expected to cost $500 to $550 million.
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Macerich is also developing the Los Angeles Premium Outlets in Carson with Simon Property Group.
Nationally, the company is also redeveloping the Scottsdale Fashion Square. Co-working company Industrious opened inside of the former Barneys New York space in the mall in January, the company said. High-end restaurants and a fitness center are part of the center’s 80,000 square foot expansion. The project will cost $140 to $160 million.
Macerich is also revamping Fashion District Philadelphia, which is estimated to cost $400 to $420 million.
“It was a good quarter with strong occupancy levels, good tenant sales growth and improved same center earnings growth,” said Tom O’Hern, the company’s chief executive, in a statement. “As we enter 2019, we have extensive development opportunities in front of us with many well-situated projects already underway or recently announced. Although some headwinds remain as we work through recent tenant bankruptcies that will impact 2019, generally the leasing environment continues to improve.”
Macerich predicts small gains in 2019. In its earning reports, the company estimated a 33 cent to 41 cent earnings per share gain. The company said it would be negatively affected by rising interest rates, anchor store closures and anticipated tenant bankruptcies.
Commercial real estate reporter Hannah Madans can be reached at [email protected]. Follow her on Twitter @HannahMadans
