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.