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.