Macerich Expands Portfolio With Crabtree Acquisition in Raleigh

The Macerich Company MAC recently announced the buyout of Crabtree Mall, a Class A retail center spanning roughly 1.3 million square feet in Raleigh, NC, for $290 million. The acquisition aligns with MAC’s 2028 target funds from operations (FFO) ranges under the Path Forward Plan. Given the scale, strong traffic and sales volume of the center, the acquisition will give a major boost to MAC’s portfolio, aiding strong leasing and net operating income (NOI) accretion.

The acquisition is expected to contribute around 11% initial yield to Macerich based on the property’s estimated 2025 NOI and around 12.5% yield inclusive of current leases signed but not opened, with rent anticipated to commence in 2027. To maximize the center’s performance, MAC is planning to implement a strategic investment plan totaling around $60 million of new redevelopment and leasing capital.

Being the largest mall in North Carolina’s high-growth Research Triangle Area, featuring more than 200 tenants, Crabtree generates annual sales of approximately $429 million with more than 8.7 million annual visitors.

Macerich has used cash in hand and $100 million of borrowings on its revolving credit line to fund this acquisition. The company intends to repay the borrowing within 30 days from an expected extension of a $160 million two-year term loan with two one-year extension options bearing interest at SOFR plus 250 basis points. The company is funding the acquisition in a way to maintain its previously stated deleveraging targets under the Path Forward Plan.

Per Jack Hsieh, President and CEO, Macerich, “Crabtree’s outstanding location brings Macerich a powerful entry point to the Southeastern US and is a strong addition to the Go-Forward Portfolio. Macerich’s proven leasing, management and redevelopment capabilities will reinvigorate leasing momentum at Crabtree, create a more inviting and refreshed ambiance and reinforce Crabtree’s longstanding reputation within the community.”

Macerich in a Nutshell

Macerich enjoys a portfolio of premium shopping centers in the United States. The company has a notable presence in California, the Pacific Northwest, Phoenix/Scottsdale and the Metro New York to Washington, DC, corridor.

In May 2024, Macerich announced a thorough Path-Forward plan, which is designed to simplify the business, enhance operational performance and decrease leverage. The above acquisition of Crabtree Mall in Raleigh, NC, highlights the company’s strategic portfolio expansionary efforts through investments in higher-growth properties with acquisitions, developments and redevelopment initiatives, which will foster future revenue growth.

Shares of this Zacks Rank #3 (Hold) company have gained 10.6% in the past month compared with the industry’s rise of 3.6%.

Stocks to Consider

Some better-ranked stocks from the broader REIT sector are VICI Properties VICI and W.P. Carey WPC,each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Zacks Consensus Estimate for VICI Properties’ 2025 FFO per share is pegged at $2.35, up 3.98% year over year.

The Zacks Consensus Estimate for W.P. Carey’s2025 FFO per share stands at $4.88, up 3.83% year over year.

Note: Anything related to earnings presented in this write-up represents funds from operations (FFO) — a widely used metric to gauge the performance of REITs.

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

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research