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Macerich (MAC) to Unveil a Target Store at Danbury Fair

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The Macerich Company MAC recently announced that Target TGT, a leading retailer, will be opening its store in Danbury Fair. The mall is located in upscale suburban Connecticut, 55 miles away from  New York City. This will also mark Target’s first store in the city of Danbury.

Danbury Fair, one of New England's largest shopping destinations, is anchored by JC Penney, Macy's, DICK's Sporting Goods and Primark. It also hosts prominent retailers and restaurants like Apple, lululemon, Anthropologie, Pottery Barn, Urban Outfitters, LL Bean, The Cheesecake Factory, Golf Lounge 18, Shake Shack, along with more than 180 other shops.

Shares of this retail real estate investment trust (REIT) marginally declined in the Jun 22 trading session following the announcement.

Target will open in the former Sears site and it will be a 126,000 square foot store 2-level store. It had also recently opened a three-level store at Macerich's Kings Plaza in Brooklyn, in a former JCPenney location.

Per Ed Coppola, president of Macerich, "Target coming to Danbury Fair is the latest anchor-replacement success for Macerich's A-quality portfolio of regional town centers. The terrific merchandise mix and attractive demographics surrounding Danbury Fair make this property a great match for all that Target has to offer."

In the past, Macerich had undertaken similar efforts to backfill its vacant spaces in the west. In May 2021, MAC had announced that Scheel's All Sports, a prominent sporting goods retailer, would be opening its first store in Arizona at the company’s Chandler Fashion Center in suburban Phoenix. The store would replace the Nordstrom department store, which shut down in the summer of 2020 amid the pandemic. These moves to backfill its vacant spaces will ensure a steady revenue stream for the company.

The retail REIT sector is witnessing a recovery backed by an increase in consumer spending and widespread vaccination drives. The retailers’ focus has now shifted from the closing of stores to the revival of their growth plans, resulting in more demand for physical store spaces. This paves the way for the retail REITs to experience gain in leasing activity, pricing power and flourish.

Furthermore, adopting an omni-channel strategy by retailers will be beneficial in the long run as online shopping cannot replace the benefits and satisfaction of visiting a brick-and-mortar store. As a result, digitally-native brands are keen on boosting their physical presence in the days to come as it provides them a direct connection with customers and drives expansion. In addition, the open-air format and pick-up concepts have been helping the landlords lure tenants even amid the health scare.

Shares of this Zacks Rank #3 (Hold) firm have plunged 39.2% over the past three months compared with the industry's decline of 14.3%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Zacks Investment Research
Zacks Investment Research


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Stocks to Consider

Some better-ranked stocks in the REIT sector are National Retail Properties NNN and SITE Centers Corp. SITC.

The Zacks Consensus Estimate for National Retail Properties’ 2022 FFO per share has moved 1.3% upward in the past month to $3.17. NNN presently carries a Zacks Rank of 2 (Buy).

The Zacks Consensus Estimate for SITE Centers' ongoing year’s FFO per share has been raised 1.8% over the past two months to $1.14. SITC carries a Zacks Rank #2, currently.

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


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