Macerich Earnings: Outperforms on Fundamentals but Tenant Sales Per Square Foot Declines
Third-quarter results for Macerich were generally better than we anticipated, leading us to reaffirm our $25 fair value estimate for the no-moat company. Occupancy sequentially improved 80 basis points to 93.4% in the third quarter, well ahead of our estimate of flat growth. Re-leasing spreads were also very strong this quarter with new rent 10.6% higher than prior rent terms, well above our estimate of re-leasing spreads of 5.6% in the quarter. As a result, average base rent increased by 2.8% in the quarter, the largest increase since 2019. Same-store net operating income excluding lease termination income increased 4.8%. Macerich reported diluted funds from operations of $0.42 per share in the third quarter, which was two cents better than our $0.40 estimate.