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Macerich (MAC) Sees Strong Demand, Inks Two Store Leases

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The Macerich Company (MAC - Free Report) is seeing decent leasing demand for its high-quality town centers from its existing and new tenants. In fact, recently, the retail landlord announced the opening of two Primark two-level stores, each the company’s Tysons Corner Center and Green Acres Mall.

With the leases, Primark will rent spaces at six of Macerich’s properties. The other four Primark stores in Macerich’s portfolio are at Danbury Fair Mall, Freehold Raceway Mall, Kings Plaza and Fashion District Philadelphia (expected to open later this year). 

Markedly, Macerich’s powerhouse mixed-use property — Tysons Corner Center — is located in Northern Virginia just outside Washington, DC, and Green Acres Mall is located in the region where New York City meets upmarket Long Island suburbs. Hence, the strategic locations of the properties have likely facilitated the company to lease out the space.

Also, the new leases deepen Macerich’s relationship with the tenants and support tenants’ growth strategy in the United States.

Per management, “Primark has experienced first-hand how well its brand connects with shoppers at our destination centers in New York, New Jersey and Connecticut – and we are confident that people in Center City, Philadelphia, Long Island and Northern Virginia also will gravitate to Primark’s well-priced, on-trend offerings. Primark is a terrific retailer and Macerich appreciates our close and expanding relationship with this growing brand.”  

The company also noted that leasing demand across its portfolio is on pace with the pre-pandemic 2019 levels. This can be attributed to its high-quality portfolio and the relaxation of mobility restrictions, which have enabled the general public to venture out of their homes. This is translating to shopper traffic and sales in Macerich’s major markets.

The rebound in the retail market has likely driven the company’s stock price in recent times. In fact, shares of the company have gained 10% over the past three months, outperforming the industry's rally of 9%.

 

 

However, over the recent years, mall traffic has continued to suffer amid a rapid shift in customers’ shopping preferences and patterns with online purchases growing by leaps and bounds. These have made retailers reconsider their footprint and eventually opt for store closures. Further, retailers, which are not being able to cope with competition, are filing for bankruptcies. This has emerged as a pressing concern for retail REITs like Macerich, Simon Property Group (SPG - Free Report) , Kimco Realty Corporation (KIM - Free Report) and Federal Realty (FRT - Free Report) , as the trend is curtailing the demand for the retail real estate space considerably.

The company currently carries a Zacks Rank of 5 (Strong Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Moreover, because of the pandemic, a significant number of tenants closed or continue to close their businesses temporarily or permanently. Others shortened or continue to shorten their operating hours or offer reduced services. As a result, issues like rent collections have declined and though rent collections from essential retail tenants’ categories have been healthy, receipts from non-essential ones have been affected.

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