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Macerich Co MAC

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Declines in Macerich's Third-Quarter Results Far Smaller Than We Had Feared

Kevin Brown Equity Analyst

Analyst Note

| Kevin Brown |

Macerich performed better than we had anticipated in the third quarter, leading us to reaffirm our $34 fair value estimate for the no-moat company. Sales per square foot for the trailing twelve months were down 10.1%, only slightly off the 7.8% decline we had estimated. Occupancy only sequentially fell 50 basis points to 90.8%, far better than the massive drop we had feared. Re-leasing spreads also did far better than we had anticipated with Macerich reported a 4.9% figure for the third quarter, in line with the figures reported for the last three quarters and well above the negative spreads we assumed the company would face amid a weak retail environment. Still, while unpaid rent in the quarter improved to 80% from 61% in the second quarter, the uncollected revenue cause same-store net operating income to fall 29.3% year-over-year in the third quarter. As a result, funds from operations fell 36 cents year-over-year to $0.52 in the third quarter, though that is 34 cents ahead of where we feared the third quarter would end up.

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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 Sep 30, 2020
Fiscal Year End Dec 31, 2020
Stock Type Hard Assets
Employees 737