A PERFECT EXAMPLE OF HOW MERGERS AND ACQUISITIONS IMPACT REITs

Implications: This is a poorly understood phenomenon, taking place before our eyes, that is likely to become the single most important factor affecting the values of both mall and strip center REITs. It is not unlike the problems resulting from the proposed "monetizing" of the underperforming SHLD stores or the ongoing problems of disposing of the 88 duplicate stores resulting from the May-Macy merger.

Analysis: Whole Foods acquires Wild Oats Markets and prevents a Wild Oats store from opening in a new Macerich shopping center not far from one of their very successful Whole Foods stores. Whole Foods finds Sports Authority as a subtenant and Macerich does not approve so Whole Foods sues. 

Now Macerich countersues Whole Foods for causing financial harm to their center and "diminishing local competition". 

With the advent of more and more merger and acquisition activity in the retail world, this kind of situation will be occurring with ever greater frequency. 

While there is something to be said for both sides of the dispute, in my opinion Macerich is clearly deserving justice after spending millions to subsidize a supermarket operation in their new center and then having the supermarket try to prevent any competition from replacing a store they do not want.

My tenant background says that "I should be allowed to do anything I want to with a store that I bargained for". ( It also says that I must abide by every clause in my lease)

My landlord background says that "I am dam sick and tired of supermarket's trying to prevent competition from ever leasing any former supermarket space".

It should be of interest to anyone interested in shopping centers to monitor this case and carefully analyze the outcome.