Macerich, a leading real estate investment trust headquartered in Santa Monica, finds itself in turbulent waters as its property, the Santa Monica Place mall, faces a precarious financial situation. The 527,000 square foot mall’s $300 million loan has been flagged for special servicing, marking the second occurrence within a span of just two years, The Real Deal reported.
The saga began in August 2022 when the same loan was first sent to special servicing due to impending maturity default. Macerich managed to stave off immediate crisis by negotiating an extension with lender Wells Fargo, bolstering its position with the purchase of a rate cap to hedge against rising rates. However, the respite proved temporary, as the mall’s struggles persisted amidst a challenging retail landscape.
Despite boasting national tenants like Bloomingdale’s and Nordstrom, Santa Monica Place has grappled with declining occupancy over the past five years, exacerbated by the impacts of the COVID-19 pandemic. As the retail sector weathered unprecedented challenges, tenant departures, including notable exits by Bloomingdale’s and ArcLight Cinemas, further compounded the mall’s woes.
Macerich’s plans for revitalization hinge on a $40 million redevelopment project aimed at reimagining the vacant spaces left by departed tenants. Anticipated to conclude within the next year, the project aims to inject new life into the struggling property and entice prospective tenants amid a challenging market landscape.
