Time New York: Sun 20 Jan 04:05 am  |  Save 15% on H&R Block Online

  
caticonslite_bm_alt

Macerich (MAC) and Hudson Lease Out One Westside LA to Google

Zacks

The Macerich Company MAC created a joint venture with Hudson Pacific Properties, Inc. HPP early in 2018 to transform the iconic mall, The Westside Pavilion, in West Los Angeles into a 584,000-square-foot Class A urban creative office campus called One Westside.

The construction of One Westside, slated to begin later this year, will mark the first-of-its-kind transformation, from landmark shopping mall to premium office space. Following the completion of construction and build out of tenant improvements in 2022, the 14-year lease term of Google will commence.

Notably, Hudson Pacific enjoys a 75% stake in the joint venture that owns One Westside while Macerich owns the rest 25%. This joint venture also owns and will carry on operating 96,000 square feet of neighboring entertainment and retail space at 10850 Pico Boulevard.

The latest move comes at a time when e-commerce has been curbing market share of store-based retailers and retail REITs like Simon Property Group SPG, Kimco Realty Corp. KIM, Macerich, and others are facing shrinking footfall as well as alarmingly rising store closures and retailer bankruptcies. Amid these, transformation of suitably placed retail properties to office spaces seems a strategic fit as demand for office assets are likely to remain high amid economic improvement and job market gains.

Moreover, in the last year, Macerich announced a national partnership with premium workplace operator, Industrious. This first-of-a-kind partnership, targeted at multi-property rollout between a co-working company and a major mall owner, came as good news for the retail space.

Per the partnership, Industrious will set up co-working spaces at selective properties of Macerich. This complements top brands in the malls and is likely to drive traffic. Notably, Industrious is a preeminent leader in the budding co-working space and has an impressive track record of strong financial performance across its locations nationwide.

In addition, Macerich has been making concerted efforts to boost mall traffic and drive sales by trying to grab attention from new and productive tenants. Nevertheless, implementation of such measures requires a decent upfront cost and therefore, would limit growth of the profit margin in the near term. Further, rate hike adds to its woes.

Macerich currently carries a Zacks Rank #4 (Sell). The company’s shares have decreased 20% in the past six months compared with the industry’s decline of 9.3%.

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



Today's Stocks from Zacks' Hottest Strategies

It's hard to believe, even for us at Zacks. But while the market gained +21.9% in 2017, our top stock-picking screens have returned +115.0%, +109.3%, +104.9%, +98.6% and +67.1%.

And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 – 2017, the composite yearly average gain for these strategies has beaten the market more than 19X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.

See Them Free>>


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

To read this article on Zacks.com click here.

Zacks Investment Research
<-- You can share this post with your network,
or give us your opinion and leave a comment.
Be sure to check our RSS feeds for updates.