Mall giant Macerich has defaulted on close to $400 million in loans backed by shopping centers in Fresno, California, and Niagara Falls, New York, as the real estate investment trust negotiates with lenders over which properties it will keep and which it will let go. The two defaults, totaling $399.4 million, mark the latest step in a broader effort by the company to pare down its national mall portfolio.
A $325 million loan tied to Fresno Fashion Fair went into default effective November 2, while a $74.4 million loan on Fashion Outlets of Niagara Falls USA defaulted effective October 6, according to Macerich's quarterly filing. The filing states that Macerich was negotiating with lenders on both loans. As CoStar News reported, the company is in the process of deciding which properties to keep as it reworks its holdings in California and New York. Fashion Fair Mall sits at 559 Shaw Ave in Fresno, while the Niagara Falls property is located at 1608 Military Rd.
A Mall On the Keep List, One Left in Limbo
Despite the default, Fashion Fair Mall remains on Macerich's list of go-forward properties, the kind of asset the company is signaling it intends to hold onto rather than sell or hand back to lenders. The Niagara Falls outlet center, by contrast, appears to be struggling on the ground: occupancy there has dipped to about 60%, and cross-border Canadian traffic that once buoyed the mall has dropped off dramatically, according to The Buffalo News.
The Macerich filing lists the Niagara Falls loan at $74.4 million.
Part of a Wider Debt Cleanup
The Fresno and Niagara Falls defaults are not isolated. Macerich previously reported that a separate $150 million loan tied to Twenty Ninth Street, with $76.5 million attributable to the company's pro rata share, went into default effective February 6. On the company's third-quarter earnings call, CFO Dan Swanstrom said that pro rata share remained in default after its February maturity date, even as talks with the lender continued, according to a transcript published by The Motley Fool.
Macerich has also defaulted on a nearly $300 million loan tied to Santa Monica Place, at 395 Santa Monica Pl, and is discussing that property's future with lenders, per Bisnow. The outlet reported that Macerich, led by president and chief executive officer Jackson Hsieh, planned to sell $100 million to $150 million worth of property in 2025 to pay down debt, and had identified an additional $350 million to $400 million in properties to sell or give back to lenders over the next year or two. Bisnow also noted the company had nearly $300 million in debt maturing in 2025 and more than $1 billion maturing in 2026.
Stronger Numbers Elsewhere In the Portfolio
Not every corner of Macerich's business is under strain. The company's Go Forward portfolio — its designated core holdings — posted 4.7% net operating income growth in the third quarter, with adjusted funds from operations at $0.37 per diluted share, the company's report shows, per Webull. Retail portfolio sales in that segment reached $972 per square foot, which the company described as a new company high, and Macerich said 906 of roughly 1,000 planned deals in its five-year leasing plan have been executed or approved, the same report notes.
Macerich's third-quarter net loss has been reported two ways: The Registry put the figure at $16.7 million, while a StockTitan search-result snippet described it as $16.1 million narrowing on rising revenue. The company has shown it can execute debt moves when conditions allow — it refinanced Queens Center with a $525 million, five-year fixed-rate loan at 5.37% to replace an existing $600 million loan, and sold The Oaks shopping center in Southern California for $157 million in December, using the proceeds to retire a $148 million loan on that property, according to Bisnow.
Whether Fashion Fair Mall and the Niagara Falls outlet center ultimately end up back in Macerich's hands long-term, sold off, or returned to lenders remains unresolved, with negotiations ongoing on both loans.
