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Macerich Co MAC

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Improving Retail Fundamentals Drive Q2 Outperformance for Macerich, Though Guidance Is a Concern

Kevin Brown Equity Analyst

Analyst Note

| Kevin Brown |

Macerich reported second-quarter results that were ahead of our expectations, leading us to reaffirm our $29.50 fair value estimate for the no-moat company. Occupancy started to recover in the second quarter with a 90-basis-point sequential improvement to 89.4%, better than our estimate of a 20-basis-point improvement. Re-leasing spreads flattened out to just a 0.2% decline, better than the 2.1% drop reported in the first quarter and well ahead of our estimate of a 9.7% decline. After four straight quarters of same-store net operating income falling more than 20% year over year, Macerich reported same-store NOI increasing 11.5%, though it is still 14.4% below the second quarter of 2019. Macerich reported funds from operations of $0.59 in the second quarter, well ahead of our $0.42 estimate for the quarter. However, management only raised the low end of 2021 FFO guidance by $0.05 to a new range of $1.82 to $1.97. Considering our current $1.88 FFO estimate for 2021 is already near the midpoint for the year before incorporating the second-quarter beat, we are concerned that the new guidance range implies the back half of 2021 will be worse than current our expectations.

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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 Jun 30, 2021
Fiscal Year End Dec 31, 2020
Stock Type Hard Assets
Employees 670