A month has gone by since the last earnings report for Macerich (MAC). Shares have added about 0.8% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Macerich due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Macerich Q2 FFO Surpasses Estimates, Revenues Miss
Macerich reported an FFO per share of 44 cents, which beat the Zacks Consensus Estimate of 40 cents. Moreover, the figure increased 18.9% from the year-ago quarter’s 37 cents.
This retail REIT experienced an increase in same-center NOI, including lease termination income, from the prior-year period.
Quarterly revenues of $215.5 million were higher than the year-ago quarter’s $212.4 million. However, the figure missed the Zacks Consensus Estimate of $219 million.
Macerich noted that it is looking at various disposition propositions to improve its balance sheet condition. Moreover, it is scouting for financers to restructure its debt maturities.
Behind the Headlines
Same-center NOI, including lease termination income, increased 1.38% year over year to $183 million.
The portfolio tenant sales per square foot for spaces less than 10,000 square feet in the trailing 12 months ended June 30, 2024. came in at $835 compared with $853 for the same period ended June 30, 2023.
During the reported quarter, Macerich signed leases encompassing 0.75 million square feet. On a comparable center basis, this reflected a 47% year-over-year decrease in leased square footage.
However, the second quarter of 2023 registered unusually heavy leasing activity from a multi-lease renewal with a major national retailer as well as other larger format space leases during the same period, and as such, the decline becomes more aggravated for the current quarter.
As of June 30, 2024, portfolio occupancy was 93.3%, down 10 basis points sequentially. Our expectation for the portfolio occupancy was 93.6%.
For the 12 months ended June 30, 2024, base rent re-leasing spreads were 10.1% more than the expiring base rent.
Balance Sheet
As of July 31, 2024, Macerich had around $612 million of liquidity. This included $465 million of available capacity on its $650 million revolving line of credit.
As of June 30, 2024, the company had a total net debt of $6.4 billion and net debt to adjusted EBITDAre of 8.48X.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended downward during the past month.
VGM Scores
At this time, Macerich has a subpar Growth Score of D, though it is lagging a bit on the Momentum Score front with an F. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Macerich has a Zacks Rank #5 (Strong Sell). We expect a below average return from the stock in the next few months.
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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.
