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Macerich (MAC) Beats on Q2 FFO, Increases 2021 Guidance

The Macerich Company MAC delivered funds from operations (FFO) per share of 59 cents, excluding financing expenses in relation to Chandler Freehold, which exceeded the Zacks Consensus Estimate of 44 cents. The figure also increased 51.3%, year over year.

Results reflect better-than-expected top-line growth. The retail REIT has also raised the mid-point of the 2021 FFO per share guidance. It continues to see significant momentum in the leasing environment.

However, shares of the company were down 5.29% during yesterday’s regular trading session on the NYSE, reflecting broader market sentiments.

The company generated revenues of $215.5 million in the quarter. The top line surpassed the Zacks Consensus Estimate of $194.3 million as well as increased 20.7% year on year.

The relaxation of government-mandated restrictions and high levels of vaccinations across the United States have resulted in significant improvement in sales and traffic across the company’s portfolio. In second-quarter 2021, comparable tenant sales from spaces less than 10,000 square feet across the portfolio jumped 13.4% relative to the pre-pandemic sales during second-quarter 2019.

Behind the Headlines

At Jun 30, 2021, portfolio occupancy was 89.4%, reflecting a 90-basis-point expansion from 88.5% as Mar 31, 2021.

In the June-end quarter, Macerich signed 223 leases for roughly 692,000 square feet of space. This marks a substantial 15% more deals and 6% more square feet than what was leased during the pre-pandemic second-quarter 2019.

Re-leasing spreads for the 12-month period ended Jun 30, 2021 were nearly flat at -0.01%. This, however, marked a sequential improvement compared to the re-leasing spreads for the 12-month period ended Mar 31, 2021, which were down 2.1%.

As of Jun 30, 2021, average rent per square foot was $62.47, relatively flat with $62.48 as of Jun 30,2020.

Same-center net operating income or NOI (excluding lease termination income) increased 10.4% from the prior-year number.

As of Jun 30, 2021, it had cash and cash equivalents of $194 million. As of Aug 4, the company had $200 million outstanding on its revolving line of credit. Its total liquidity as of the same date amounted to roughly $500 million.

The company made progress towards lowering leverage, with $1.3 billion of debt repaid between Mar 31, and Aug 4, 2021.

Guidance

Assuming no further government-mandated shutdowns of its properties, the company raised the lower end of its guided ranges, narrowing the ranges and raising the mid-point of the 2021 FFO per share guidance. The REIT now expects 2021 FFO per share of $1.82-$1.97 compared with the $1.77-$1.97 guided earlier. The Zacks Consensus Estimate for the same is pegged at $1.84.

Dividend Update

On Jul 30, Macerich announced a quarterly cash dividend of 15 cents per share. The dividend will be paid out on Sep 8 to shareholders of record as of Aug 19, 2021.

Currently, Macerich carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Macerich Company The Price, Consensus and EPS Surprise

Macerich Company The price-consensus-eps-surprise-chart | Macerich Company The Quote

Performance of Other Retail REITs

Simon Property Group, Inc.’s SPG second-quarter 2021 adjusted FFO per share of $2.92 handily exceeded the Zacks Consensus Estimate of $2.37. This performance was backed by better-than-expected top-line growth. The retail REIT behemoth also raised the 2021 FFO per share outlook based on its results in the year so far and expectations for the rest of 2021. It also announced a hike in its quarterly dividend.

Kimco Realty Corp.’s KIM NAREIT FFO per share came in at 34 cents, topping the Zacks Consensus Estimate of 31 cents for the April-June period. This also compared favorably with the year-ago quarter tally of 24 cents. Results displayed better-than-anticipated revenue numbers. Moreover, the retail REIT raised the guidance for 2021 on improved outlook.

Realty Income Corporation’s O second-quarter 2021 adjusted AFFO per share of 88 cents came in line with the Zacks Consensus Estimate. The reported figure also compares favorably with the prior-year quarter’s 86 cents. Results reflect better-than-expected improvement in revenues. The retail REIT also raised its 2021 adjusted FFO per share guidance and increased the 2021 acquisitions volume projections to $4.5 billion.

Note: Anything related to earnings presented in this write-up represent funds from operations (FFO) — a widely used metric to gauge the performance of REITs.


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