Calif.-based retail real estate investment trust (REIT),
The Macerich Company
), reported second-quarter 2013 adjusted funds from operations
(AFFO) per share of 87 cents, beating the Zacks Consensus
Estimate of 81 cents. Moreover, this was substantially higher
than the year-ago figure of 74 cents. Strong escalations in
revenues, overall portfolio occupancy and re-leasing spreads
aided the results.
Including the impact of non-recurring items, FFO came in at 87
cents per share, compared with $1.57 in the year-ago period.
Nevertheless, Macerich raised its FFO per share outlook for
Total revenue surged 26.1% year over year to $262.9 million.
Moreover, this significantly beat the Zacks Consensus Estimate of
Beneath the Headlines
As of Jun 30, 2013, overall portfolio occupancy upped 110
basis points (bps) year over year to 93.8%. Moreover, mall tenant
annual sales jumped 6.2% year over year to $545 per square
In addition, re-leasing spreads for the second quarter rose
14.2% on a year-over-year basis. Same centers net operating
income (NOI) during the quarter advanced 4.6% year over year to
Notable Portfolio Activities
In tune with its portfolio enhancement activity, Macerich sold
5 non-core assets, namely Green Tree Mall, Northridge Mall,
Rimrock Mall, Kitsap Mall and Redmond Town Center office
building. The divestitures generated proceeds of $468 million on
a pro rata basis. Moreover, subsequent to quarter-end, on Aug 1,
Macerich sold the retail section of Redmond Town Center and
generated proceeds of about $63.6 million on a pro rata
Furthermore, Macerich continued constructions at Tysons Corner
Center for the development of a mixed use project, which includes
an office building, a luxury residential tower and
Hyatt Hotels Corp.
)'s Hyatt Regency hotel. The office tower is currently over 60%
leased to 2 tenants, Deloitte LLP and Intelsat, Ltd. The project
is slated to open in 2014.
Subsequent to quarter-end, on Aug 1, Macerich opened its
526,000 square feet fashion outlet center - Fashion Outlets of
Chicago - after completion of construction. The 93% occupied (on
the opening day) property includes several well-known retailers
such as Bloomingdale's The Outlet Store,
Skechers USA Inc.
) and Last Call by Neiman Marcus.
As of Jun 30, 2013, Macerich had cash and cash equivalents of
$46.9 million compared to $68.8 million at the prior quarter-end.
The company had a total debt of $6.5 million at the end of the
In the quarter, Macerich reaped net proceeds of $171.2 million
by selling 2.5 million shares under its at-the-market program at
the time when the company was included in the S&P 500 Index.
The proceeds were utilized to pay off debts.
Moreover, Macerich committed to refinancing worth $850 million
of Tysons Corner super regional mall. The company also planned
the extension and rate reduction of its unsecured line of credit
worth $1.5 billion.
For full-year 2013, Macerich raised its FFO per share guidance
in the range of $3.38-3.48 (prior range of $3.35-3.45). Notably,
the company increased its guidance for the second time this
In tandem with its winning streak, Macerich reported
impressive quarterly result on the back of solid operating
fundamentals. The company's A-quality malls portfolio positioned
across the most attractive U.S. markets drive occupancy and
revenues growth. Moreover, significant developments and portfolio
restructuring activities strengthens long-term growth prospects.
The guidance increase also boosts investors' confidence in the
stock and is thus encouraging.
Currently, Macerich carries a Zacks Rank #2 (Buy).
Note: FFO, a widely accepted and reported measure of REITs
performance, are derived by adding depreciation, amortization
and other non-cash expenses to net income.
GAP INC (GPS): Free Stock Analysis Report
HYATT HOTELS CP (H): Free Stock Analysis
MACERICH CO (MAC): Free Stock Analysis Report
SKECHERS USA-A (SKX): Free Stock Analysis
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