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Macerich Co MAC

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Morningstar’s Analysis

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Macerich's Q1 Slightly Ahead of Expectations as Fundamentals Start to Recover

Kevin Brown Equity Analyst

Analyst Note

| Kevin Brown |

First-quarter results for no-moat Macerich were slightly better than we had anticipated, leading us to reaffirm our $29.50 fair value estimate. Occupancy fell another 160 basis points sequentially to 88.5%, slightly better than our 88.1% estimate. While re-leasing spreads were negative again in the first quarter, the 2.1% decline was better than the 3.6% decline in the fourth quarter of 2020 and far better than our conservative estimate of a 9.8% decline. Consequently, same-store net operating income was down 27.6% year over year in the first quarter, though that is an improvement over the 34.0% year-over-year decline seen in the fourth quarter of 2020 and better than the 31.2% decline we had assumed for the first quarter. Macerich reported funds from operations of $0.45 per share, $0.02 ahead of our estimate. While management lowered 2021 FFO guidance to a new range of $1.77-$1.97, the prior guidance didn't account for the equity issuance that the company executed during the quarter. Given that we currently estimate Macerich will produce 2021 FFO of $1.88, we think the new guidance range is reasonable.

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Company Profile

Business Description

The Macerich Company is an S&P 500 company that invests in premium mall assets. The company owns 29 regional malls in its consolidated portfolio and 19 regional malls in its unconsolidated portfolio along with six power centers and six other real estate assets. The company's total portfolio has 50.6 million square feet gross leasable area and averaged $801 sales per square foot for the past 12 months, with the consolidated portfolio averaging $646 sales per square foot and the unconsolidated portfolio averaging $998 sales per square foot.

401 Wilshire Boulevard, Suite 700
Santa Monica, CA, 90401
T +1 310 394-6000
Sector Real Estate
Industry REIT - Retail
Most Recent Earnings Mar 31, 2021
Fiscal Year End Dec 31, 2020
Stock Type Hard Assets
Employees 670