Westfield to give up SF location amid declining sales, Nordstrom closure, company says

SAN FRANCISCO (KGO) -- Westfield is giving up its downtown San Francisco shopping mall and will surrender to its lender, the company said on Monday.

"We have made the difficult decision to begin the process to transfer management of the shopping center to our lender to allow them to appoint a receiver to operate the property going forward. San Francisco Centre's debt is non-recourse and this action has no impact on the rest of URW's debt," Westfield wrote in a statement on Monday.

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The company said it has seen a significant decrease in sales in the San Francisco location from $455 million in 2019 to $298 million in December 2022.

In that same period, Westfield Valley Fair in San Jose has seen a 66% increase in sales, the company said.

"The center's occupancy level has decreased dramatically to approximately 55% including already announced closures of tenants such as Nordstrom, Banana Republic and others. Our US Flagship portfolio occupancy averages around 93%," the company wrote in the press release.

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This also comes as Banana Republic closed its Union Square store and its anchor store, Nordstrom, is set to close.

According to the San Francisco Chronicle, the company stopped making payments on a $558 million loan. Earlier this month, Westfield and its partner, Brookfield Properties, started transferring control of the mall at 865 Market St., the newspaper reported.

San Francisco Mayor London Breed released the following statement after Westfield's announcement:

This has been something that has been coming for some time. We've had numerous conversations with Westfield about the future of this site, and it's been clear that they did not have a long-term commitment to San Francisco as they look to withdraw entirely from the United States market. With new management, we will have an opportunity to pursue a new vision for this space that focuses on what the future of Downtown San Francisco can be.

Whether that's attracting new types of business or educational institutions, or creating a totally different experience, we need to be open to what's possible. Retail is changing, and we will adapt to diversify and better use spaces in our Downtown area. This is at the heart of what we are trying to create in San Francisco as we move forward.

For now, the stores at the mall remain open under the new management. The public safety resources we've dedicated to the area, including ambassadors and police officers, remain in place. The stores are still a part of our Downtown experience and we will continue to support this area to make it clean, safe, and inviting for everyone.

Here is the full statement Westfield provided to ABC7 News:

"For more than 20 years, Westfield has proudly and successfully operated San Francisco Centre, investing significantly over that time in the vitality of the property. Given the challenging operating conditions in downtown San Francisco, which have led to declines in sales, occupancy and foot traffic, we have made the difficult decision to begin the process to transfer management of the shopping center to our lender to allow them to appoint a receiver to operate the property going forward. San Francisco Centre's debt is non-recourse and this action has no impact on the rest of URW's debt.

The unprecedented impact to the performance trends at San Francisco Centre are counter to positive increases in sales, occupancy and foot traffic across the rest of our portfolio.

We have seen a significant decrease in total sales at San Francisco Centre from $455 million in 2019 to $298 million in Dec 2022 YTD, a period where Westfield Valley Fair in neighboring San Jose experienced a +66% increase in sales, URW's California Flagships center's sales increased by +26% and our overall US Flagship sales have increased by +23%.

Since 2019 foot traffic has decreased to 5.6 million visits (Dec 2022 YTD) from 9.7 million, a 43% drop at a time when our US Flagship portfolio has seen a 98% recovery.

The center's occupancy level has decreased dramatically to approximately 55% including already announced closures of tenants such as Nordstrom, Banana Republic and others. Our US Flagship portfolio occupancy averages around 93%."

Stay with ABC7 News for the latest details on this developing story.

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