Macerich (MAC), which has nearly $4 bn of debt due over the next three years faces a daunting task ahead to navigate as a going concern. Further compounding the problems for MAC is the Company’s property portfolio, which is highly susceptible to the current crisis, built on high leverage (current LTV of 85% based on market value) and including a significant number of underwater properties with negative equity. As expectations of a recession are fast turning into a reality, a slowdown in consumer spending and a consequent impact on retailers would result in additional pressure on the Company’s occupancy levels, impacting its rental rate growth and net operating income...Is Macerich an undervalued victim of a bear market slaughter, or is it a bankruptcy waiting to happen?
From the NY Observer:
Related has recently expressed worries about financing to numerous real estate executives and others familiar with the project, saying that the company has had trouble raising new money, according to those people.
Although such credit problems are hardly unique, Related, not known for doing much on a shoestring budget, has also cut back its payments to contractors. The firm stopped paying its architects, according to people familiar with the developer. And just as the public review is beginning for zoning changes integral to the project, Related has cut by half the amount it is paying its lobbying firm Capalino + Company, according to lobbying records. The lobbying firm specializes in guiding projects through the public review process.
Not to mention the firm has had massive layoffs over the past few months and has cut back the staff working on its new projects to 4 or 5 people...
And to round out the post, let me remind you about the Muss predicament.
So, to update the Willets Point developer recap from December:
Forest City Ratner Companies
General Growth Properties, Inc.
The Macerich Company and AvalonBay Corporation
The Related Companies
Muss Development LLC
The Westfield Corporation
TDC Development & Construction Company
Part 3 coming soon!