KCRag Forum

Can't the city take back the Plaza thru eminent domain if the owners sink?

An Altman Z-score "below 1.8 means it's likely the company is headed for bankruptcy, while companies with scores above 3 are not likely to go bankrupt. " However... "Professor Altman himself noted that recent data has shown that 0—not 1.8—is the figure at which investors should worry about a company's financial strength."

Simon is below 1.1 according to report above, probably still not healthy either way.

https://www.investopedia.com/terms/a/altman.asp

May partly be the reason Nordstrom pulled out.

Latest update here, score 1.05 now...
https://www.gurufocus.com/term/zscore/N ... erty-Group

Why's it bad if the owners go bankrupt? That means they'll sell and we can get someone else running it

They may still hold onto Plaza if (a) never reach bankruptcy but sitll weak or (b) manage a deal out of bankruptcy. Either way likely not able to give it the capital improvements Plaza deserves. But yes, hopefully they do sell to a healthier mixed use owner.

Plaza vacancy was 15% according to Dec filing, very high. Newmark Zimmer says KC metro average about 5.6% in Dec. So can't blame state of retail in general.

Senior unsecured debt is rated A (Negative Outlook) by Standard & Poor’s and A3 (Stable Outlook) by Moody’s. Preferred stock is rated BBB+ (Negative Outlook) by Standard & Poor’s and Baa1 (Stable Outlook) by Moody’s. Commercial paper is rated A1 (Negative Outlook) by Standard & Poor’s and P2 (Stable Outlook) by Moody’s. Standard & Poor’s corporate rating for Simon Property Group is A (Negative Outlook)

SPG is basically a F500 with investment grade bonds. So idk how likely a default would be.

Their equity performance is a whole different item.

I would love to see the Plaza owned by someone who isn't a Mall owner.

I'm getting very confused on who even owns the Plaza. Taubman, Macerich or Simon?

Simon acquired Taubman recently, I think entirely. Taubman is a subsidiary of Simon. Macerich and Taubman bought Plaza at 50/50 share originally but maybe Taubman has more share now, not sure.

As unhealthy Simon appears to be, is relatively better of the two depending on how calculated. Macerich Z-score is even worse than Simon...
https://www.gurufocus.com/term/zscore/N ... e/Macerich

Capital improvements for Plaza is apparently already a challenge and could continue to be difficult to score tenants.

earthling wrote: ↑Wed Apr 13, 2022 2:53 pm Simon acquired Taubman recently, I think entirely. Taubman is a subsidiary of Simon. Macerich and Taubman bought Plaza at 50/50 share originally but maybe Taubman has more share now, not sure.

As unhealthy Simon appears to be, is relatively better of the two depending on how calculated. Macerich Z-score is even worse than Simon...
https://www.gurufocus.com/term/zscore/N ... e/Macerich

Capital improvements for Plaza is apparently already a challenge and could continue to be difficult to score tenants.

Sounds like a mess, obviously from the results. Really curious how a 50/50 partnership like this would work? Macerich decides to sell their stake: does Simon get first right to buy? Can they veto a sale? Does either only having half a stake bring less focus on bringing in retailers for the district? Maybe, one half of the partnership selling would be the best solution for the district; either one taking a 100% stake and becoming more focused on filling space or a motivated second partner who injects some juice into the partnership to get it moving.

would anyone local be interested or have the cash buy the 50% or all of it? and they might not do any better if they manage mostly suburban strip centers

The challenge isn't just finding a healthier buyer, it's finding a buyer that has deep enough pockets to continue capital improvements and take Plaza to next level rather than milking it.

ericwyner wrote: ↑Thu Apr 14, 2022 3:02 am would anyone local be interested or have the cash buy the 50% or all of it? and they might not do any better if they manage mostly suburban strip centers

I’d buy it but…

Perhaps VanTrust. They might need another local partner though.

earthling wrote: ↑Thu Apr 14, 2022 8:21 am The challenge isn't just finding a healthier buyer, it's finding a buyer that has deep enough pockets to continue capital improvements and take Plaza to next level rather than milking it.

$100 million+ equity investment to buy it. More needed to turn it around.


Really need a redevelopment opportunity to make it worth it imho

normalthings wrote: ↑Fri Apr 15, 2022 10:48 am

earthling wrote: ↑Thu Apr 14, 2022 8:21 am The challenge isn't just finding a healthier buyer, it's finding a buyer that has deep enough pockets to continue capital improvements and take Plaza to next level rather than milking it.

$100 million+ equity investment to buy it. More needed to turn it around.


Really need a redevelopment opportunity to make it worth it imho

Exactly, I don't think KC really has a 'mall operater' in town with that type of deep pockets. Block, Cordish, McCownGordon, Price Bros., etc. all do renovation, new builds, complete redevelopment, etc. Even though they are building around the plaza, they are not out signing leases with all these commercial tenants. The Plaza has its issues for sure, but I don't think its struggles are a result of a particular issue vs. a symptom of an overall slowdown in retail and online.

They should focus more on leasing up bars, restaurants, residential, and pedestrianizing streets and take some of that vacant retail spaces off the market and rebuild it into like high end (low rise unfortunately) residential or something else. Then they can go after ultra-lux shops like Louis Vuitton, Gucci, etc.

I noticed a KC Star article regarding the Nordstrom's space a couple of days ago citing some of the options for the future of that space. Anybody want to give a recap? Obviously, Dillards has been in the conversation. Target? Residential?

Seems like the plaza would be a perfect fit for a theater like IPIC.

Big Lots or BAM or smaller Mejier concept.

Not for the former Nordstroms, but KC needs an Aritzia and that would be perfect on the Plaza. Lush would also work well there (although they are already at Oak Park)

normalthings wrote: ↑Fri Apr 15, 2022 10:48 am

earthling wrote: ↑Thu Apr 14, 2022 8:21 am The challenge isn't just finding a healthier buyer, it's finding a buyer that has deep enough pockets to continue capital improvements and take Plaza to next level rather than milking it.

$100 million+ equity investment to buy it. More needed to turn it around.


Really need a redevelopment opportunity to make it worth it imho

What kind of redevelopment opportunity are you thinking? Wondering how much the desire to preserve the Plaza in amber will hinder its prospects of long-term survival.

chaglang wrote: ↑Tue Apr 19, 2022 8:40 am What kind of redevelopment opportunity are you thinking? Wondering how much the desire to preserve the Plaza in amber will hinder its prospects of long-term survival.

It will until it won't. The Plaza real estate is some of the most valuable in the city. The simple economics will dictate at some point that the ice will have to break. The bowl theorists will be on the losing side of the argument at some point, more exemptions or scrapping the bowl plan for something else completely. 6-8 stories of residential on top of whatever goes at the Nordstrom site would be a good start.