Key Takeaways:
Macerich Co. acquired the Annapolis Mall for $272 million, a move that expands its portfolio of high-end retail properties and shows confidence in the resilience of physical retail in prime locations. The real estate investment trust said the deal for the Class A mall in Annapolis, Maryland, includes a 1.5 million-square-foot retail center and an adjacent 13.1-acre vacant parcel, positioning Macerich to control the dominant retail space east of Washington, D.C.
"Annapolis is exactly the kind of acquisition we said we would pursue,” said Jackson Hsieh, President and Chief Executive Officer of Macerich. “It’s located within a strong trade area with limited competition, the property is undergoing a significant elevation and transformation of its merchandising plan and tenant mix, and there is a clear path to durable NOI growth that is accretive to our 2028 target FFO ranges under the Path Forward Plan."
The acquisition is expected to generate a yield of approximately 9.2 percent based on an estimated year one net operating income (NOI) of about $24 million. This yield is projected to rise to 10.5 percent, or $29 million in NOI, when including signed-not-open leases. Macerich plans to invest an additional $40 million in leasing capital to further enhance the property, which already has a strong pipeline of new tenants including Dick’s House of Sport, Dave & Busters, and Tesla.
This transaction underscores a strategic push by retail REITs to acquire well-positioned assets with growth potential, even as the broader commercial real estate market faces headwinds. Macerich is funding the acquisition with $85 million in cash from its ATM program and $150 million in borrowings from its revolving credit line. The company expects the financing to align with its deleveraging targets, aiming for a stabilized pro forma yield of around 11.0 percent by 2030 and to increase sales productivity to over $800 per square foot.
This article is for informational purposes only and does not constitute investment advice.
