Macerich In Development Push

Among the developments that Coppola discussed was the shopping-center REIT's plans to redesign its Santa Monica Place mall here. Macerich announced plans for the repositioning some time ago, and has been involved since then with planning the project.

As it stands now, Coppola said that the company is looking at an open-air design for the mall that would connect it to the adjacent Third Street Promenade. The company is also considering options for a Robinson's-May store, which could be redeveloped for several users or for a single specialty department store.

The REIT reported on other redevelopment and development activity including the scheduled Oct. 12 opening of the first phase of Twenty-Ninth Street, an 877,000-sf shopping district in Boulder, CO, with the balance of the project scheduled for completion in the spring. The project is 75% leased with another 15% of the space committed.

Construction began on the 435,000-sf Village at Flagstaff Mall, a 45-acre large format and lifestyle expansion of Flagstaff Mall. The project is expected to be completed in phases starting in the fall of 2007.

At Westside Pavilion in Los Angeles, construction continues on the redevelopment of the western portion of the center that will include a 104,000-sf Landmark Theatre, a Barnes & Noble and restaurants. The estimated completion of the redevelopment is fall 2007.

Macerich continued its strategy of selling non-core assets with the June sale of Scottsdale 101, a power center in Phoenix, for $117.6 million. Macerich owned 46% of the center, which was developed by the company's Westcor subsidiary.

In July, the company sold Holiday Village Mall, Greeley Mall and Parklane Mall for an aggregate purchase price of $105 million. In addition, the sale of Great Falls Marketplace is scheduled to close in August. The centers totaled 1.6 million sf and averaged $239 per sf in annual tenant sales.

Coppola says that the sale of the four centers "continues our strategy of recycling and redeploying our capital." Doing so has placed the company in a better position for developing and redeveloping its portfolio, he says.

Macerich reported that net income for the second quarter ended June 30 totaled $25.7 million or 36 cents per share, compared with $6.7 million (11 cents per share) for the comparable quarter last year and funds from operations totaled $85.3 million (96 cents per share) compared to $77 million ($1 per share) for the same period last year.

During the quarter, Macerich signed 398,000 sf of specialty-store leases at average initial rents of $41.14 per sf, and starting base rent on new lease signings was 24.5% higher than the expiring base rent. Total same-center tenant sales for the quarter were up 4.4% compared to sales for the quarter ended June 30, 2005. Total revenues climbed to nearly $208 million for the quarter versus $186 million in the second quarter of last year.