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Macerich (MAC) Q4 FFO Top Estimates, Revenues Decline Y/Y

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Retail REIT - The Macerich CompanyMAC - came up with fourth-quarter 2016 funds from operations ("FFO") per share of $1.17, which came a cent above the Zacks Consensus Estimate and a nickel ahead of the prior-year quarter tally of $1.12. Results were driven by improvement in releasing spread and same center net operating income.

The company posted revenues of $272.0 million for the quarter, surpassing the Zacks Consensus Estimate $262 million. Revenues were $320.8 million in the prior-year quarter.

For full-year 2016, Macerich reported FFO per share of $4.08, which was well above the year-ago tally of $3.81. Total revenue came in at $1.04 billion, which marked a 19.2% contraction from the prior year.

Quarter in Detail

As of Dec 31, 2016, mall portfolio occupancy contracted 70 basis points (bps) year over year to 95.4%. Mall tenant annual sales decreased to $630 per square foot from $635 at the end of fourth-quarter 2015. However, re-leasing spreads rose 17.7% on a year-over-year basis. Also, same centers net operating income grew around 2.1% from the prior-year comparable period.

As of Dec 31, 2016, Macerich's cash and cash equivalents were $94.0 million, up from $84.2 million as of Sep 30, 2016.

2017 Guidance

Macerich has provided its guidance for 2017. The retail REIT expects FFO per share in a range of $3.90-$4.00 for the year. This is below the Zacks Consensus Estimate, which is currently pegged at $4.29.

The company anticipates 2017 cash same store NOI to grow 3.0-4.0%. Moreover, the guidance includes a dilution of $0.08 per share due to the Jan 2017 sale of Northgate Mall, Cascade Mall as well as an additional non-core asset presently under contract.

Our Viewpoint

We are encouraged with the better-than-expected FFO per share number at Macerich. The company's premium portfolio, presence of well-capitalized tenants in its centers, aggressive capital-recycling program and adoption of omni-channel retailing strategies augur well for long-term growth. However, increasing consumer purchases through the Internet have emerged as a pressing concern for retail REITs, including Macerich. Further, geographic concentration of assets and hike in interest rate pose concerns for the company.

Currently, Macerich has a Zacks Rank #4 (Sell). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here .

Macerich Company Price, Consensus and EPS Surprise

Macerich Company (The) Price, Consensus and EPS Surprise | Macerich Company (The) Quote

So far, the results of retail REITs have been mixed. General Growth Properties Inc. GGP , which changed its name officially to GGP Inc. on Jan 27, came up with FFO per share of 43 cents. This was in line with the Zacks Consensus Estimate and the prior-year quarter tally as well. Total revenue in the quarter came in at $610.3 million and exceeded the Zacks Consensus Estimate of $607 million. (Read more: GGP Q4 FFO in Line with Estimates, Revenue Tops, NOI Grows )

Moreover, Simon Property Group, Inc. SPG reported fourth-quarter 2016 adjusted FFO per share of $2.91, up from the year-ago quarter tally of $2.73. The Zacks Consensus Estimate for the quarter was $2.51. Growth in operating income aided the results. (Read more: Simon Property Q4 FFO & Revenues Top, Dividend Up )

Also, Kimco Realty Corporation KIM reported fourth-quarter 2016 FFO as adjusted of 38 cents per share, in line with the Zacks Consensus Estimate and up a cent from the prior-year quarter figure of 37 cents. The company essentially accomplished its exit from Canada by selling 34 Canadian shopping centers for a gross price of $894.7 million during 2016. (Read more: Kimco Realty Meets Q4 FFO Estimates, Revenues Down Y/Y )

Note: All EPS numbers presented in this write-up represent funds from operations ("FFO") per share. FFO, a widely used metric to gauge the performance of REITs, is obtained after adding depreciation and amortization and other non-cash expenses to net income.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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