Markets Frozen for Some But Not All; Macerich Secures Financing Deals Totaling $446M

Lenders still aren’t rolling out the red carpet for the real estate industry, but some firms, like the Macerich Co., are managing to get their hands on financing despite the inhospitable environment. The Santa Monica, Calif.-based shopping center REIT just announced two refinancing deals totaling $320 million, and two loan extensions valued at $126 million.

Macerich will refinance the Shops at North Bridge, a 680,000-square-foot retail destination in Chicago, to the tune of $205 million, courtesy of a loan from a life insurance company. Scheduled to close in June, the loan is for a seven-year term and carries a fixed interest rate of 7.5 percent. The company will also refinance the 827,000-square-foot Twenty Ninth Street Center in Boulder, Colo., with a two-year loan carrying an initial 5.25 percent interest rate and the option for a one-year extension.

Macerich’s recent financing activity is also allowing the REIT to stave off a couple of maturities. A two-year extension was attained for the company’s $54 million CMBS loan on the 988,000-square-foot Inland Center in San Bernardino, Calif. The loan’s existing fixed interest rate of 4.64 percent will increase incrementally starting July 11, 2009, and will ultimately mature on Feb. 11, 2011. Additionally, Macerich secured an extension of its $72 million loan on the 893,000-square-foot Northridge Mall in Salinas, Calif.

The extended loan, which is now due to mature in January 2011, carries a fixed interest rate of 7.5 percent. Once the four aforementioned financing deals wrap up, the company will be left with $223 million of 2009 loan maturities.Macerich can sing the same sad tune being sung by so many REITs these days, particularly those in the retail sector, which has suffered immensely with the country’s severe economic decline.

The fully integrated self-managed and self-administered REIT has a portfolio totaling approximately 76 million square feet of interests in 72 regional malls. Over the last 12 months, company stock has dipped as low as 97 cents per share and risen as high as $27.35.

“For Macerich, we view bankruptcy as a possibility, although it is not imminent,” Todd Lukasik, analyst with investment research firm Morningstar Inc., told CPN. “They’re carrying more debt than some of the retail real estate companies we cover, but the nearly half-billion in financing announcements are certainly encouraging for Macerich and the industry, in general.”

One retail REIT, General Growth Properties Inc., has had an especially rough time of late. On Monday, the firm failed to win an extension from bondholders on payment of $2.25 billion in bonds held from The Rouse Co., a developer General Growth acquired in 2004.

The REIT–the nation’s second-largest mall owner–has already defaulted on several mortgage loans. The latest news of the failed extension was enough to send General Growth’s stock price sliding by 7.6 percent to 61 cents a share on the New York Stock Exchange. Overall, shares of the company have plummeted 98 percent since the start of 2008.

But other industry players have had better luck in keeping the flow of capital open, including Liberty Property Trust, which recently attained $317 million in loans secured by industrial and office properties. Also in March, a joint venture involving The JBG Cos. and Rockwood Capital L.L.C. obtained $100 million in financing to replace a construction loan for an office property in Washington, D.C., with the assistance of Holliday Fenoglio Fowler L.P.