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.