Southridge Mall keeps shrinking in value
The sign near the cash register says, “line starts here,” but at Southridge Mall, it could start here, there or anywhere.
With rush-hour traffic streaming by Southridge, the only lines on a recent late afternoon were at the stop lights at Army Post Road and Southeast 14th Street. After 5 p.m., there were no lines inside the mall.
A mother and her child tapped on a window at the Reptile Rescue League. A young lady was having her eyebrows shaped at the Eye Brow Studio 21 kiosk. There were no books being traded at Book Trader and there were no customers to keep in line at Sears.
Southridge is a shopping mall that, for tax purposes, is worth less than the parking ramp at Merle May Mall.
Macerich Co., the Iowa-bred and California-based real estate investment firm that owns Southridge, recently won an appeal of its tax assessment in Polk County District Court.
The company, a $6 billion manager and owner of some of the most exclusive shopping centers in the country, argued that a $7.5 million property tax assessment for Southridge was too high. That assessment placed Southridge’s value at $12.35 a square foot, $5 less per square foot than the most recent assessment of the Merle Hay parking garage.
With assessments for retail properties a reflection of their ability to generate sales and income, the Southridge tax bill is an indication that the 35-year-old mall might be due a new purpose in life.
Sadie Trytten, executive director of the South Des Moines Chamber of Commerce, said she would just like to see the mall “strengthen and grow.” However, she has not heard of any efforts to pump new life into the South Side mainstay.
When Macerich bought Southridge in 1999 from Equitable Life Assurance Society of the United States, the value of the mall itself was about $37.5 million, with the building valued at $33.3 million and the 35 acres it sits on valued at about $4.2 million.
The land and building values have flipped, with the building valued at $322,000 and the land valued at nearly $7.3 million by Polk County tax assessors for the 2010 tax year.
Macerich appealed those numbers, first to the Polk County Board of Review, which upheld the assessments, then to Polk County District Court.
On Sept. 21, Judge Michael Huppert reduced the assessments for Southridge, dropping the land to $4.2 million and the building to $74,300.
The reduction in assessments lowered Macerich’s tax bill to $118,718 from $343,324.
Macerich Corp. was founded in 1964 by Mace Siegel of Ames. His leadership team came to include former Des Moines boys Arthur and Edward Coppola. Arthur Coppola is the company’s chairman and CEO; Edward Coppola is its president.
Des Moines business leaders Jim Cownie and Fred Hubbell are members of its executive board. The Coppolas and Cownie could not be reached for comment. Hubbell, contacted via e-mail, directed questions to corporate headquarters in Santa Monica, Calif. Company representatives at Southridge Mall could not be reached for comment.
Macerich has made news in recent weeks after The Wall Street Journal reported that the company had joined other real estate investment trusts in a practice that is called “jingle mail,” in which owners of commercial property stop paying mortgages on properties whose value has dropped below their level of debt.
The tactic is used as a bargaining chip to renegotiate loans. If that ploy is not successful, the owners essentially mail the keys to the lenders.
Arthur Coppola also drew some attention when he cashed in nearly $11 million in company stock.
Macerich reported in its second-quarter financial statement that it had successfully renegotiated the terms on loans that were due this year.
The company has drawn mixed reviews from analysts, due primarily to its level of debt.
Macerich reported increases in retail sales and occupancies at its malls. The company did not include data for individual malls.